InsurTech/M&A/Financeđź’°/Collaboration
Cambridge Mobile Telematics Acquires Amodo
Cambridge Mobile Telematics (CMT), the world’s largest telematics service provider, announced today that it has acquired Amodo, an award-winning telematics company based in Europe. The acquisition brings together two telematics companies with large and growing footprints in Europe, giving Amodo’s customers access to the most advanced telematics solutions for driver risk measurement, proactive crash and claims services, and behavioral modification to reduce driving risk. Amodo will adopt the CMT name.
“From try-before-you-buy, to pay-as-you-drive, to pay-per-mile, our team has launched over 50 telematics programs over the past nine years. We look forward to bringing our capabilities and market expertise in Europe and beyond to CMT.”
CMT now powers over 95 active telematics programs in 25 countries, including nine in continental Europe. The world’s leading insurers, automakers, gig companies, fleet operators, and mobility companies offer these programs to consumers with a broad range of experiences and benefits. Users of these programs save money on insurance, become safer drivers by reducing risky behaviors such as phone distraction, and get automatic roadside assistance within minutes after a crash.
“CMT is rapidly expanding its global footprint beyond the United States, where CMT serves 21 of the top 25 insurers. In just the past few years, we’ve become the trusted partner for insurers and mobility providers on five continents,” said William Powers, CMT’s Chief Executive Officer. “We’re strengthening our European efforts by adding Amodo’s expansive market knowledge and deep relationships, and doubling our team in Europe to over 100 people to enable more European organizations to realize the incredible benefits of telematics — all while saving lives on the road.”
Global insurance M&A activity hits 10-year high in 2022; mixed outlook for 2023
- Bumper year for insurance deals offset by significant slowdown in H2’22
- Asia-Pacific only region to see continued upward trend in deal volume in H2
- Two-speed deal market forecast for 2023
- Investor sentiment will strengthen as insurers eye range of growth options
- Abundant capital and availability of targets points to uptick in M&A in H2’23
There were 449 completed mergers and acquisitions (M&A) worldwide in the insurance sector in 2022, up from 418 the previous year, the highest for a decade. However, there was a marked downturn in the second half of the year with 207 deals completed, compared to 242 in H1, as economic and inflationary pressures began to impact investor sentiment, according to Uncertainty breeds opportunity, the latest edition of global law firm Clyde & Co’s Insurance Growth report.
Eva-Maria Barbosa said: “Uncertainty continues to provide barriers to growth for the insurance sector, with significant headwinds coming out of the events of the last year. The war in Ukraine continues to complicate global trade and drive up costs, while some eye-opening weather events in 2022 that exceeded all loss expectations have confounded the property catastrophe (re)insurance market."
“However, there is optimism that the economy is set to emerge from this difficult period as inflation stabilises. When it does there remains plenty of capital to be deployed and likely no shortage of M&A targets. As investor sentiment improves, ambitious insurers, particularly at the top end of the market – as well as private equity houses – will move to seize these opportunities.”
Altai Ventures Launches New Fund for InsurTech & FinTech Startups
Differentiated Fund to Help InsurTech and FinTech Founders Reinvent Financial Services
Altai Ventures, an early-stage venture capital firm, has announced the closing of Altai Ventures Fund II, LP. The fund closed with USD $53 million in total commitments, surpassing its goal of USD $50 million.
Altai Ventures, an early-stage venture capital firm, has announced the closing of Altai Ventures Fund II, LP. The fund closed with $53 million in total commitments, surpassing its goal of $50 million.
Investors of Altai’s latest fund consisted of leading financial and institutional Limited Partners (LPs), including Bain Capital Ventures, Century Equity Partners, and LPs across property and casualty insurance, life insurance and retirement, insurance brokerage, and commercial banking.
“One of the things that attracted us to Altai is that our investment philosophies are very much aligned. At Bain Capital Ventures, we help build iconic companies, not just back them. The same can be said for the team at Altai–they like to roll up their sleeves and work alongside startup founders,” said Matt Harris, Partner, Bain Capital Ventures. What also attracted us to Altai was their operating experience and knowledge of the InsurTech space. We’re looking forward to collaborating with them on early-stage opportunities and incubations in this area.”
Altai Ventures, which has offices in Westport, CT, and New York City, specializes in InsurTech, FinTech, and enterprise software for financial services. The mission of Altai is to empower extraordinary founders to reinvent financial services through technology. Altai Ventures mainly invests in Series Seed and Series A rounds, where it can leverage its operating expertise, deep industry knowledge, and strategic LPs to drive immediate, meaningful value creation.
“We deeply believe in a principles driven business model with customer centricity at the heart of it and, as a result, have constructed a platform that can drive substantial and differentiated value for our founders and strategic partners,” said Oleg Ilichev, Founder and Managing Partner of Altai Ventures. “Financial institutions represent a multi-trillion dollar industry that is still at the early stages of technological transformation. Now that we’ve closed on this new fund, we’re looking forward to working with inspiring entrepreneurs and our strategic LPs to solve some of the biggest challenges in financial services.”
Altai’s investments are primarily focused on the North American market, with investments in the range of $200K – $500K for Seed rounds and $1M – $3M for Series A rounds. Some of the companies Altai has backed and has provided strategic guidance to include:
-EvolutionIQ, a leader in AI-driven claims guidance that helps injured and disabled individuals return to the workforce (tripled its revenue three years in a row)
-LULA, an integrated suite of insurance infrastructure tools used to build and maintain insurance programs (recorded over 900% year over year revenue growth in 2022)
-Newfront, a tech-enabled commercial insurance and benefits brokerage, which raised $200M in its Series D round ($2.2B Valuation)
Root Books Another Loss; Stays Positive on Embedded Insurance
Calling embedded insurance the “next secular trend in distribution,” Root Inc. CEO Alex Timm in a letter to shareholders said the company has an advantage to scale access in the channel and become profitable.
Root reported a net bottom-line loss of $58.3 million for fourth-quarter 2022, an improvement over a net loss of about $110 million during the same period in 2021. For all of 2022, Root recorded a net loss of about $298 million compared with a net loss of about $521 million in 2021.
However, Timm said the InsurTech is positioned for profitable growth in new writings and continued improvements in loss ratios. The company’s fourth-quarter combined ratio clocked in at about 180, which is an improvement over combined ratios of about 185 and 217 for the third and second quarters of 2022, respectively. The Q4 2021 combined ratio was about 212.
Prudential, Vitality Global expand partnership in Latin America
Prudential Financial, Inc. (NYSE: PRU) and Vitality Global, a leading health and well-being company offering smart InsurTech with the goal to build a healthier world, have entered a 10-year, expanded partnership. Under this agreement, Prudential will leverage Vitality’s model to promote healthier lifestyles to complement its Total Wellness offering throughout Latin America.
Insurance AI Leader EvolutionIQ's Funding Total Rises to $33.1M With Series B Round While Valuation Passes $200M
EvolutionIQ, the market-leading AI-powered Claims Guidance platform for Disability, Workers' Compensation, and Property & Casualty insurance, today announced that it completed its Series B round, raising $7M at a greater than $200M valuation. Brewer Lane Ventures led the round, with participation from all major existing investors including First Round Capital, FirstMark Capital and Foundation Capital, and joined by Principal Financial Group®, the major insurance company and existing EvolutionIQ customer.
EvolutionIQ's Growth Story
"We dramatically increased our customer base and tripled our contracted revenue in 2022," said Tomas Vykruta, CEO and co-founder of EvolutionIQ, and former Artificial Intelligence Technical Leader at Google. "Every pilot we completed turned into a production customer and our existing customers are rapidly implementing new software modules from us. EvolutionIQ is now producing significant recurring revenue and has less need for financing, so we limited the amount raised to minimize dilution to our employee and investor shareholders.
Brush rewires natural disaster damage claim processing
The rise of Lemonade and like-minded personal lines insurtechs starting in 2017 led Brush Claims to reassess its offerings. The claims insurtech specializing in natural disaster damage claims began building its own systems to complement its experience managing property claims, according to Troy Stewart, president and COO of Brush Claims.
Founded in 1991 as claims solution provider Brush Country Claims, the insurtech completed a ten-week development program at Lloyd's Lab in London in December. In July 2021, Brush Claims was one of only 11 applicants chosen out of 170 for the seventh group of the program begun in 2018. Participants work with insurers in Lloyd's market to test and develop their ideas and technologies.
Elite Construction Solutions Continues Its Growth With The Acquisition Of Two Restoration Contracting Firms
Elite Construction Solutions (ECS), an integrity-driven contractor, specializing in storm restoration and mitigation, recently acquired Universal Roofing & Exteriors and Jackson Contracting. The acquisition immediately expands ECS’s footprint into the Indiana market where it will offer best-in-class exterior general contracting services. This acquisition also allows Universal and Jackson to fully leverage ECS’s suite of shared services including its storm restoration training, estimating services, proprietary technology, data analytics and back-office resources.
Waller Helms Advisors acted as financial advisor to Elite Construction Solutions in this transaction.
WallerHelms Advisors
Alacrity Solutions Group, LLC (“Alacrity Solutions”), a recognized leader in providing insurance claims management services in North America, today announced the acquisition of Spartan Recoveries LLC (“Spartan”). Founded in 2010, Spartan is a leading, tech-enabled provider of independent subrogation solutions to the property and casualty industry. The company’s tools and strategies enable the review of large quantities of data to quickly determine where recovery opportunities exist and lead to shorter recovery cycle-times, reduced expenses and a significant increase in net recoveries for clients.
Kathleen J. Smith, Managing Director of Spartan stated, “We are delighted to become part of Alacrity, and look forward to continuing the innovation that has allowed Spartan to be successful over the last 13 years. Combining Spartan's talent and portfolio with Alacrity allows us to expand our capabilities to help bring our subrogation solutions to more clients, while helping current clients get the most out of the combined platform. We look forward to realizing the immense value this partnership stands to create for our customers, employees and partners.”
Waller Helms Advisors acted as financial advisor to Spartan Recoveries in this transaction.
News
State Farm Reports Record Underwriting Losses in 2022
Auto insurance business reports underwriting loss of $13.4 billion. State Farm is the largest private passenger auto insurer in the U.S.
In 2022, State Farm’s auto insurance companies reported record underwriting losses due to rapidly increasing claims severity and significant additions to prior accident year incurred claims. While State Farm experienced unfavorable operating results in auto, State Farm Mutual Automobile Insurance Company remains financially strong.
“While 2022 was a year of significant growth at State Farm, our annual operating results were not at the level we expect as we consider each affiliate’s financial strength and long-term performance. At the same time, the organization remains financially strong,” said Senior Vice President, Treasurer and Chief Financial Officer Jon Farney.
“We’re pleased we could assist our customers during the pandemic and we’re there to help them navigate the current period of high inflation. As we take actions to improve our operating performance, we look forward to helping more people in more ways as we begin our next 100 years.”
Progressive uses telematics to launch new insurance products
Progressive is using data from its telematics program to launch an accident response service (think: OnStar) for all of its customers in March, whether they use Snapshot or not, Jim Haas, the company's usage-based insurance business leader, said during the Tuesday conference call.
Progressive also is working with General Motors Co. and Toyota Motor Corp. to develop telematics hardware that the automakers would install on their new models, Haas said.
Eventually, Progressive could buy data from these automakers to supplement the data it gathers through Snapshot, he said.
Telematics Updates Are Transforming Auto
Insurers are becoming more adept at using telematics to differentiate their products, reduce risks and expenses and continue improving the policyholder experience.
The use of telematics to monitor consumer driving behaviors is becoming table stakes in auto insurance, yet the technology also offers strong opportunities for enhancing the policyholder experience. Leading carriers are now evolving their use of telematics to differentiate their usage-based insurance (UBI) products to provide a robust, seamless user interface, streamline claims handling and influence the policy buying experience.
The use of telematics to monitor consumer driving behaviors is becoming table stakes in auto insurance, yet the technology also offers strong opportunities for enhancing the policyholder experience. Leading carriers are now evolving their use of telematics to differentiate their usage-based insurance (UBI) products to provide a robust, seamless user interface, streamline claims handling and influence the policy buying experience.
Beth Robertson, managing director, Keynova Group
Hurricanes moving farther north to pummel millions more homes in U.S.
Is it possible to predict exactly where the wind will blow? How about where it will blow 30 years from now?
The First Street Foundation, a nonprofit that works to define and communicate risks posed by climate change, reported it developed a model to assess “hyper-local climate wind risk” in the U.S. now and into the future.
First Street estimates that 13.4 million U.S. properties that aren’t currently vulnerable to tropical cyclones likely will be in 30 years’ time. Annual damages from high winds will rise by $1.5 billion to nearly $20 billion in 2053, according to the report, with damages rising the most — 87% — in the Northeast U.S. The Mid-Atlantic region will see the largest increase in maximum wind speeds, with maximum wind gusts in some places blowing up to 37 miles per hour faster.
The group based its model on pioneering peer-reviewed research by Kerry Emanuel, an atmospheric scientist at the Massachusetts Institute of Technology. Emanuel projected in 2006 that climate change was likely to increase storms’ intensity and might shift their geography.