AIG sheds SIFI label. New CVC funds. This week in insurance tech.
We were saddened to hear about last night’s tragic events in Las Vegas, where we know many of you on this newsletter are planning to be for the ITC conference this week. Our thoughts are with the victims and families of all those affected.
Infrastructure for insurance tech
In July, Markel acquired publicly-traded “fronting” carrier State National for $919M (or 14.5 times its estimated 2018 earnings). In discussing the acquisition on its Q2’17 earnings call, Markel co-CEO Richard Whitt III described that the move could help provide a conduit into “the insurtech space”:
This week, we saw a glimpse of what this might look like. Boost Insurance, a startup backed by $3M from investors including Norwest Venture Partners, partnered with Nephila Capital and State National to provide insurance startups access to 1/ product development 2/ regulated insurance paper and risk capacity and 3/ data analytics and reporting services.
Boost plans to primarily make money through a revenue share model of commissions earned by the startups it works with that is meant to scale down as premium revenue grows. The company says its aiming to launch with its first startup partners in early 2018.
If parts of this sound familiar, it’s because product development, insurance capacity and tech are also listed capabilities of Munich Re’s Digital Partners program. One difference is that Munich Re has also participated in or led significant equity financings to some of the startups it has partnered with as well. Worth noting Munich Re and Markel or State National have previously partnered with or invested in some of the samestartups.
As of last year, the total number of MGAs was estimated at more than 1,000, ranging from large national organizations to small, single-state ones, but the growth of the independent, digital, venture-backed variety has really only taken form in the last few years.
All of these initiatives presuppose that startups pursuing the digital MGA model will continue into the future. Boost says it plans to work with both pre-launch startups as well as existing companies looking to launch new products.
Zhong An goes public
The Chinese online-only insurer jumped in its public market debut Thursday and currently has a market cap of just over $10B. For comparison, Lending Club‘s valuation at the time of IPO was $5.4B, while Square‘s was $2.9B.
One thing to think about moving forward is how Zhong An might take advantage of new risks constantly emerging in China’s digital economy. One example is bike-sharing, estimated to grow to as many as 50M users by the end of the year. Per China Daily:
“Online insurer Zhong An is the first to provide insurance for shared-bike users. According to data from Alibaba Group’s financial affiliate Ant Financial, rider insurance against accidents has settled more than 100 claims in the last three months.”