Until recently, the traditionally complex and highly regulated insurance sector was largely untouched by new technologies. As recently as 2014, insurtech firms raised just USD 300m in total financing globally, according to a report by tech advisory firm Drake Star.  

But the rise of fintech, which helped to popularize new financial business models, and the impact of the COVID-19 pandemic have catapulted digital-first insurance solutions into the limelight. Insurtechs raised USD 10.5bn in financing last year, more than double the USD 4.8bn recorded in 2020, according to the same Drake Star report.  

The sector has carried some of that momentum into this year. The standout deal came earlier this month when Berlin-based Wefox raised USD 400m in fresh funding from investors including UAE-based sovereign wealth fund Mubadala Investment at a USD 4.5bn valuation. This is 50% higher than the USD 3bn valuation it achieved at its previous fundraise last year.   

Denmark’s management-owned insurance software firm Scalepoint Technologies is, meanwhile, raising EUR 15m-EUR 20m in a process guided by EY.  

As this year has progressed, however, European technology firms have found it harder to raise capital as macroeconomic factors, including rising inflation and the war in Ukraine, have caused a downturn in the capital markets and squeezed valuations.  

But this market correction could lend itself to a ramp-up in insurtech M&A, an area of the market which is yet to fully mature, said Flemming Bengsten, CEO at Barclays-backed invoice insurer Nimbla. Larger, well-funded companies will seek “bargains” by acquiring smaller peers at a discount to expand their customer bases, he said.  

Indeed, there have been 24 M&A deals involving insurtechs in Europe so far this year with a total disclosed value of EUR 2.7bn, according to Dealogic, compared to 31 deals with a total disclosed value of EUR 1.6bn last year.  

French home insurer Luko, for example, has completed two deals already this year. In January, it acquired German peer Coya before snapping up Paris-based developer of rent guarantee solutions Unkle in March. The financial terms of both deals were undisclosed. Luko raised EUR 50m in late 2020 in a Series B round led by EQT’s [STO:EQT] venture capital arm and still has runway left, its Chief of Staff, Florian Giraud, told this news service in March.  

Paris-based Garantme is also on the acquisitive trail, having acquired local peer Loumi in May. The company was aiming to raise EUR 20m in a Series B round by March this year to fund European expansion, including further acquisitions, CEO Thomas Reynaud told this news service in February.  

Meanwhile, Germany’s GetSafe expects to make acquisitions, including potentially other insurtechs or distributers in Germany and the UK, Mergermarket  reported in December. The Heidelberg-based company tapped Morgan Stanley to raise its USD 93m Series B round in November last year.  

Insurtech firms, however, are not immune to macroeconomic pressures and, in response, some companies, including UK-based DeadHappy, are bringing forward their fundraising plans. The company is “very mindful” of the more difficult environment to raise financing, its CEO Phil Zeidler told this news service last month, adding that it was not possible anymore to assume funding was going to be available as before. 

The difficult environment has also had an impact on potential IPO plans, such as in the case of Wefox, which is now opting to defer its listing in view of the current choppy markets and given that it is well-financed. Indeed, listed peers such as US-based Lemonade and Hippo have seen their stock prices drop dramatically this year.  

It remains to be seen whether the momentum seen in 1H22 will continue for the remainder of the year, but the healthy pipeline of opportunities bodes well for a strong finish and a potential new record for the European insurtech space. 

Proprietary intelligence 

Davies (22/07/22)

Davies, a UK-based insurance outsourcing solutions provider, is broadening its geographical footprint with a particular focus on the US market, including via acquisitions, a source close to the company said. The company, which helps insurers and other clients in highly regulated markets manage their risk and operate their core business processes, is gaining market attention in part because of their ambitious growth plans in the US, an advisor familiar with Davies said. The US now provides a meaningful part of Davies’ business, which has grown substantially since BC Partners agreed to buy out the group last March, the source said. The sponsor made its first investment in Davies last August.

Wefox (20/07/2022)  

Wefox, a German insurtech, sees little rationale in going public for now, having just raised USD 400m of equity and debt and with additional financing coming down the pipe, CEO Julian Teicke said. The company had been preparing for an IPO with a view to potentially listing this year, but the project was parked in light of choppy markets, a source familiar with the situation said, describing the explorations as early stage. Wefox’s recent USD 400m Series D round was led by Abu Dhabi’s Mubadala Investment Company, with participation from EDBI, Eurazeo [EPA:RF], LGT, Horizons Ventures, OMERS Ventures and Target Global. 

Flock (19/07/2022)  

Flock, a UK-based commercial motor fleet insurer, is gearing up for a Series B fundraise, CEO Ed Leon Klinger said. The venture capital-backed company, which insures more than 10,000 vehicles, plans to raise a round to facilitate “continued exponential growth” and expansion into new European geographies and segments within the commercial fleet insurance space. It has grown more than 30x since its previous fundraise, a USD 17m Series A round led by Social Capital in July 2021. M&A is also one of the options the London-based company is considering as it seeks to scale.  

Yulife (15/07/2022)  

YuLife, a UK-based digital life insurance company, is considering taking on further capital as it continues to receive fresh unsolicited approaches from investors, co-founder and COO Sam Fromson said. In July, the London-based insurtech firm raised USD 120m in a Series C round led by Japanese peer Dai-ichi Life Holdings [TYO:8750]. Management is now assessing whether it is the right time to raise further capital after being approached by new investors. There will be “interesting opportunities” for the company, potentially including M&A, if it can further strengthen its financial position against the backdrop of a market downturn.  

Hedvig (14/07/2022)  

Hedvig, a Stockholm, Sweden-based insurance technology company, plans to raise a Series C funding round next year as it continues to expand into new product segments and geographies, CEO Lucas Carlsen said. The Anthemis-backed company, which also operates in Denmark and Norway, wants to strengthen its leading position in the Nordic markets before venturing into other European countries. It obtained a regional carrier license, which allows it to operate throughout the European Union, in 2020. Anthemis led Hedvig’s USD 45m Series B round in September, which took the company’s total funding to USD 68m.   

Nimbla (08/07/2022)  

Nimbla, a London-based B2B insurtech startup backed by Barclays [LSE:BARC], will start approaching strategic investors, potentially including insurance companies, over the European summer as it mulls expansion into the US, CEO Flemming Bengtsen said. The company, which has processed GBP 3.2bn (EUR 3.8bn) in invoices over the past two years, would like to sell an unspecified stake to an investor that could help it set up operations in the US. Investors that would bolster its distribution channels, offer new technology, or add complementary data to its product suite are also appealing.  

Zelros (06/07/2022)  

Zelros, a B2B provider of AI-powered software for the insurance industry, plans to enter the US and Canadian markets within weeks, co-founder and COO Damien Philippon said. A North American expansion would be followed by a Series B raise of USD 20m-USD 30m, most likely late this year or in early 2023. The Paris-based company has raised USD 16.5m to date. Founded in 2016, Zelros counts European insurers Matmut, Credit Agricole and AXA among its customers, while it is in "advanced discussions'' with several players in North America.  

Instanda (01/07/2022)  

Instanda, a London-based insurance software platform, will explore acquisition opportunities over the next 12 months following its recent Toscafund-led funding round, CEO Tim Hardcastle said. Potential targets could include companies developing supply chain enablement and management technology that could be bolted onto Instanda’s claims platform, which will be going live in 1Q23. The recent drop in tech company valuations will create an “attractive” M&A market and present opportunities for Instanda that it otherwise would not have been able to pursue. Tosca became Instanda’s largest external shareholder when it led its USD 45m funding round in June.   

DeadHappy (21/06/2022)  

DeadHappy, a Leicester, UK-based insurtech, plans to approach potential investors next year to raise between GBP 50m-GBP 100m, CEO Phil Zeidler said. While the venture capital-backed company does not need additional capital at the moment, it wants to guard against a downturn in the capital markets, potentially caused by macroeconomic factors such as Russia’s invasion of Ukraine. The digital-only company plans to invite both financial and strategic investors to participate in the upcoming round. It will consider engaging a financial advisor to assist with the fundraise. DeadHappy has raised GBP 16m since it began trading in 2018.   

Alan (20/05/2022) 

Alan, a France-based online health-insurance company, could consider bolt-on acquisitions as part of its expansion in Europe, General Manager for France Fabrice Staad said. The company, which reached EUR 200m in annual recurring revenue (ARR) this month, is not in talks with any potential targets but remains on the lookout for acquisition opportunities. Targets would offer healthcare-related services, or be European data specialists, and would be in line with the value of Alan’s acquisition of Jour. The company bought New York-based mental wellbeing app Jour for USD 20m last September.  

Climatica (12/05/2022)  

Climatica, a Poland-based insurtech firm, could look to raise up to EUR 4m within 18 months, CEO Tadeusz Prochwicz said. The company could offer about a 10% to 20% of stake in return for the EUR 4m raise and talks could start in about a year. International VC funds and insurance sector players could be potential investors. At present, the company is finalizing a seed round worth less than EUR 1m and representing around a 10%-20% stake. Existing investors include FundingBox Deep Tech Fund, while talks with another undisclosed fund are in their final stages.