#Insurtech

Secondary Markets Amidst Decreased Insurtech Funding

The Rise of Secondary Markets Amidst Decreased Insurtech Funding

The Insurtech sector, once a magnet for venture capital (VC) funding due to its potential to revolutionize the insurance industry, has recently experienced a significant slowdown in new investments. Economic uncertainties and a more cautious investor mindset have contributed to this decline in primary market activity. As a result, secondary markets—where stakeholders can trade existing shares of private Insurtech companies—have become increasingly important. These markets now serve as a critical source of liquidity for investors and employees, especially as securing new funding rounds becomes more challenging.

A Shift in Insurtech Investment Dynamics

The Insurtech industry, known for its innovation in streamlining and digitizing traditional insurance services, has been notably affected by the broader economic downturn. According to Fintech Global, funding for Insurtech companies in the U.S. dropped by 67% year-over-year, reflecting a shift from growth-oriented investments to a focus on profitability. This change in investment strategy has left many Insurtech firms struggling to raise new capital. In this environment, secondary markets have emerged as a vital alternative, providing a means for stakeholders to realize value from their investments when primary market opportunities are scarce.

With companies staying private longer and facing challenges in attracting new capital, secondary transactions offer a crucial lifeline. Early investors and employees can turn to these markets for liquidity, as traditional funding rounds become more difficult to secure. This trend is supported by BCG, which notes that the Insurtech hot streak has cooled, underscoring the necessity of alternative liquidity solutions.

Secondary Markets as a Response to Funding Challenges

The slowdown in Insurtech funding has led to significant discounts in secondary market valuations. According to Insurance Business Magazine, many Insurtech companies are trading at valuations up to 40% lower than their last funding rounds. This reflects the broader challenges these companies face in securing new capital. Despite these discounts, investor interest in secondary Insurtech shares remains strong, driven by the potential for long-term gains once market conditions improve.

Secondary markets provide investors with a more affordable entry point into the Insurtech sector, which continues to be seen as a high-risk, high-reward industry. The attractiveness of these markets is heightened by the correction in primary market valuations from their previous highs. For Insurtech companies, engaging in secondary market transactions not only helps sustain investor interest but also provides much-needed liquidity to employees holding stock options, which might otherwise be difficult to monetize. Insights from Tenity reinforce the role of secondary markets in offering liquidity solutions amidst a challenging funding environment.

Looking Ahead: The Future of Insurtech Secondary Markets

As the Insurtech industry continues to navigate through a period of reduced funding, secondary markets are expected to play an increasingly critical role. The anticipated recovery of the IPO market could provide better pricing benchmarks, potentially stabilizing valuations and making secondary investments more appealing. However, until that recovery materializes, secondary markets will remain a key mechanism for liquidity in the Insurtech sector.

Moreover, as Insurtech companies mature and look for ways to sustain growth without relying solely on new VC rounds, secondary markets will provide a necessary outlet for early investors and employees to capitalize on their holdings. This trend is likely to persist, particularly as Insurtech continues to attract attention for its innovative potential and the ongoing digital transformation of the insurance industry. Insurance Times, highlights that while funding has plummeted, secondary markets are stepping in to offer much-needed support and liquidity.

In conclusion, the decline in Insurtech funding has underscored the growing importance of secondary markets as a vital tool for liquidity and investment. As the Insurtech industry adapts to new financial realities, secondary markets are poised to remain central to its continued growth and evolution.

Sources:

  1. Funding for Insurtech companies in US dropped by 67% YoY as investors pull back - Fintech Global

  2. Insurtech’s Hot Streak Has Ended. What’s Next? - BCG

  3. Global Insurtech funding falls below $1 billion in Q1 2024 - Insurance Business Magazine

  4. Insurtech funding: The state of Insurtech in 2024 - Tenity

  5. US Insurtech investment activity in freefall as funding declined 78% YoY - FinTech Global

  6. Insurtech funding plummets in Q1 2024 - Insurance Times

Classement 2023 des Leaders en Assurance Vie en France

Introduction

L'année 2023 marque une période significative pour le secteur de l'assurance vie en France, avec des mouvements notables dans les rangs des principaux acteurs du marché. Le graphique qu’on va vous présentez révèle les dix principales compagnies d'assurance vie en fonction de leurs actifs sous gestion, soulignant la dynamique concurrentielle et les performances financières clés. Dans cet article, nous analysons le récent classement publié par MoneyVox qui met en lumière les géants de l'assurance vie française.

Actifs sous gestion : un indicateur de stabilité financière

Les actifs sous gestion (AUM) sont un baromètre essentiel de la santé financière dans l'industrie de l'assurance vie. Ils reflètent la confiance des investisseurs et la capacité des assureurs à gérer efficacement les portefeuilles d'investissement. Plus les actifs sous gestion sont élevés, plus l'institution financière est considérée comme stable et fiable.

Les Leaders du Marché en 2023

Selon le graphique, Crédit Agricole domine le marché avec 277 milliards d'euros d'actifs sous gestion. CNP Assurances suit de près avec 265 milliards d'euros. Ces chiffres illustrent non seulement leur grande part de marché mais aussi la confiance que les consommateurs et les investisseurs placent en eux.

Credit Mutuel, avec 146 milliards d'euros, BNP Paribas Cardif avec 142 milliards d'euros et Axa France Assurances avec 135 milliards d'euros complètent le top cinq. Chaque compagnie a démontré des compétences notables en gestion d'actifs, en répondant aux besoins de leurs clients et en s'adaptant aux évolutions du marché.

Analyse du Classement

Ce classement est une vitrine pour les tendances actuelles et futures du marché de l'assurance vie. Les positions occupées par ces entreprises témoignent de leur stratégie commerciale, de leur innovation en matière de produits d'assurance vie et de leur réactivité face aux changements réglementaires et économiques.

Conclusion

Le graphique du top 10 des compagnies d'assurance vie en 2023 est plus qu'une simple représentation numérique; c'est un reflet de la stratégie, de la performance et de la confiance. Pour les clients potentiels, les investisseurs et les analystes du marché, ces informations sont cruciales pour comprendre où placer leur confiance et leur capital dans l'année à venir.

Insurance Trends in Asia: A Bright Future For Insurtechs? #VC

Insurance in Asia has extremely high growth potential…

Insurtech and insurance in general has extremely high growth prospects in the region, much more so than in other more mature markets like Europe. 

Over 40% of the middle class population in Southeast Asia is uninsured: the scope of penetration for digitally charged insurance businesses through technology mediums like smartphones is huge. As standards of living rise and health concerns (for example linked to the pandemic) remain a preponderant issue, we expect demand for insurance products to increase. Penetration rates for Asia-Pacific stood at 3.8% for life insurance and 2.1% for non-life insurance in 2018, considerably lower than in the UK and the US that reported rates of over 10%. Insurance company Swiss Re estimates that by 2029, 42% of gross insurance premiums would originate from Asia-Pacific, with China accounting for 20% of this. Asian consumers are increasingly looking at insurance not just as a protection but also as an investment option.

This is likely to lead to significant revenue growth for actors in this industry, as shown above by the projection of the evolution of premiums in the coming years. 

….providing a unique opportunity for the development of insurtechs…

According to McKinsey, insurance companies in Asia are therefore very aggressive in terms of growth prospects, and insurtech can be a key way to rapidly reach under-served consumers.

The key point is that while there is a very large potential for growth, it may not be best served by traditional insurers. As shown above, customers now prefer digital solutions.  This is where insurtechs can play a major role. 

Indeed, VC funding in the sector has reached large levels in recent years. Venture capital has also recognized the potential profits to be made from digitally disrupting insurance. According to a paper by Bain,  in the past five years, venture capital firms have invested about $3.8 billion in Asia-Pacific insurtechs, including online sites that sell directly to the public, online brokers and advisers, and aggregators or digital marketplaces.

According to the report, in fast-growing markets such as mainland China, India and Indonesia, insurtechs can “leapfrog” incumbents and gain market share. Digital marketplaces, which allow customers to easily compare and select policies from competing carriers, may be able to conquer a significant share of the insurance profit pool. In major markets around the world, a majority of retail insurance customers—especially young, digitally active ones—are open to switching to another provider, including companies from outside the industry, such as retailers, automakers or tech firms, according to Bain & Company’s fourth global survey of more than 174,000 customers in 18 countries (“Customer Behavior and Loyalty in Insurance: Global Edition 2018”). Asia-Pacific insurance consumers are very receptive to new ideas and new players. In Thailand, Indonesia, mainland China and Malaysia, for example, more than 85% are open to buying from new entrants, according to Bain’s survey.

…which for now remain concentrated in mainland China, Hong Kong and other East Asian countries. However a key trend for coming years will be the emergence of new markets

Banks in financial hubs of SouthAsia, Singapore, and Hong Kong have already received significant investments in Insurtech: For example, DBS bank from Manulife of 1.2 Billion dollars, Citibank from AIA group 800 Million dollars and Standard Charted from Prudential 1.25 Billion dollars.

Singapore and Hongkong are providing a wide range of development and growth options like incubators, insurance labs and more for startups in the insurtech sector.

Asian Insurtechs startups and CVC

Examples of insurtech startups from around the region

As shown above, a number of high potential ventures have developed around the region. For instance, China is also seeking to build up big online platforms to provide various insurance options personal, medical, auto online. Malaysia has already started reaping the benefits of such platforms by slowly reducing the need for live agents.

Nonetheless, other markets are also seeing the development of insurtechs. For example, insurtech funding in India has increased from only 11 million USD in 2016 to 287 million in 2020, with startups such as Turtlemint which raised 30 million in late 2020. 

Insurtech can help the sector remove obstacles to growth…

According to McKinsey, Asian insurers currently tend to suffer from three main weaknesses: 

Sales force professionalization. The entire US insurance industry, as one example, has a few hundred thousand agents. Agency forces in Asia are significantly larger—China alone has roughly eight million insurance agents. However, the level of professionalization in Asia lags behind the developed world. Part-time and poorly trained agents are the norm in much of Asia. As customers continue to grow more sophisticated, Asian carriers will have to upgrade their agency forces. They can learn much from the West in terms of recruiting, capability building, and ongoing performance- and compliance-management. Western carriers are now helping agents migrate from product sellers to holistic advisors which provides a blueprint for Asia.

Analytics-driven decision making. The West is increasingly applying data and analytics in all elements of the business to improve the quality and consistency of decision making. In some cases, this has progressed to rely extensively on third-party data. In Asia, the use of data and analytics is less mature. Carriers need to invest in their internal data assets (i.e., capturing and storing more useful data), external third-party data integration, advanced analytics capabilities, and “last mile” adoption of analytics solutions. There is tremendous opportunity for carriers in all elements of the value chain, including pricing and underwriting, sales force effectiveness, customer servicing, and claims. Given the distributed nature of insurance operations in Asia and the talent gap, this is an even bigger opportunity.

Operational discipline and efficiency. Asian carriers can learn from the operational discipline of insurers in developed markets. Faced with the prospect of slower growth, Western insurers have long focused on improving efficiency through more optimized operations. Asian executives have underinvested in operational discipline and efficiency. It is not uncommon to find dozens of branches or field offices with widely varying operating practices. This increases costs, delivers suboptimal customer experience, and introduces significant compliance risk. Asian carriers will have to focus more time and investment on these issues in the near future. They can benefit from the new toolbox that has emerged which combines digital, analytics, robotics, and NLP to re-invent customer and back office journeys.

… and artificial intelligence is a key driver of change

The advancement of Artificial Intelligence (A.I) allows for much faster understanding of this data. This empowers intermediaries and underwriters to engage clients knowledgeable with data driven policy advice in real time.

Customers want to connect with insurers from virtually anywhere and at any time. The employment of AI processing will soon permeate almost every facet of the insurance business. For example, the insurer QBE Asia has “started seeing benefits from integrated AI systems that streamline and automate our claims workflow and reduce costs by consolidating the underwriting processes on a centralized platform”. They also deploy Robotic Process Automation to save significant costs on repetitive non-value adding tasks and have started to actively integrate connected devices (Internet of Things, IoT) into their insurance processes.

Finally, public authorities are likely to modify and adapt regulations in reaction to the development of digital insurance and insurtechs

According to Bain, “digital disruption is getting a push from regulators. In Singapore, Hong Kong and, more recently, Indonesia, authorities are actively promoting digital innovation and have established government funded incubators, known locally as sandboxes, to encourage insurers to experiment with new technologies”. Singapore and Hong Kong are emerging as hubs for telematics and insurtechs, and consumer use of digital channels in those markets is growing rapidly. This means new regulations are likely to be put in place, and insurtechs should prepare for this risk.

Le CVC, un secteur en pleine expansion

D'après l’article paru sur TechCrunch en mars 2022. 


Le boom d’investissements en capital risque qui a marqué l’année 2021 n’a pas été uniquement le fait de fonds en capital risque traditionnels. En effet, d’autres acteurs et sources de capital ont joué un rôle clé: des nouvelles méthodes d’investissements angel et seed, jusqu’à des fonds crossover qui soutiennent des startups late stage. Et au milieu de toute cette activité frénétique et des levées records, les investisseurs corporate ont continué à développer leurs importance au sein du paysage VC. 

Corporate Venture Capital (CVC) est la méthode par laquelle des entreprises mettent en place leur propre structure d’investissement. Traditionnellement, cette démarche unit des objectifs stratégiques (M&A, accès à la technologie, partenariats) et financiers (retours sur investissement). La pondération de chacun varie en fonction de l’entreprise et du développement de leurs équipes CVC, mais il est rare de trouver des CVC qui n’ont qu’un de ces objectifs. Cela fait de leurs investissements un intéressant mélange d’investissement en capital risque classique et action stratégique de l’entreprise. Du point de vue des startups, le CVC est également très attractif. Par exemple, cela leur permet de s’adosser à un partenaire expérimenté, et donc de bénéficier de ses ressources, réseaux et expériences. La perspective d'être potentiellement racheté par le corporate offre également une sortie attrayante pour les entrepreneurs et les investisseurs. 


Les CVCs étaient exceptionnellement actifs l’année dernière, et il n’y a jamais eu autant d’acteurs. Si on analyse les données publiées par CB Insights, il est clair que 2021 fut une année charnière pour ce secteur, avec des records battus dans la plupart des indicateurs. Les CVC sont également de plus en plus présents au sein de l’espace médiatique. Par exemple, MondoDB, une startup de codage qui a fait son introduction en bourse il y a cinq ans, a mis en place son propre fond. MondoDB et d’autres startups à succès comme Coinbase sont intéressantes car elles sont actives dans le CVC avant même d’atteindre le statut d’entreprise mature et établie. Cette dynamique ne s'arrête pas là, et le CVC n’est désormais plus cantonné à une poignée de multinationales comme Axa et General Electric. Maintenant, même des entreprises privées plus petites s’y mettent, ce qui met en évidence à la fois les délais de plus en plus larges avant les IPOs, et l’abondance de fonds disponibles pour être utilisés en VC. 


Examinons maintenant les données du secteur de manière plus précise. Il y a deux indicateurs principaux pour examiner l'évolution du secteur. Tout d’abord, le nombre et la rapidité avec laquelle de nouveaux CVC sont mis en place, et le rythme auquel ceux déjà existants investissent. Si on examine le premier indicateur, il est clair que nous assistons, ces dernières années, à une expansion sans précédent du secteur. Selon CB Insights, il y a eu 221 nouvelles structures CVC, un chiffre en augmentation de 53% par rapport à 2020. Néanmoins, ce chiffre reste légèrement en deçà de l’augmentation en 2018, qui était de 259. 2021 reste tout de même la deuxième année en termes de créations depuis que nous avons des données sur les CVC. 


Une expansion rapide, ainsi que des acteurs diversifiés


Serge Tanjga, Senior Vice President chez MongoDB, remarque que, d’un point de vue technologique, les entreprises tech plus matures “mettent en place des équipes CVC car ils ont des capitaux en surplus à allouer, et parce qu'être un acteur VC aidera le positionnement de leur marque”, tandis que les entreprises tech plus jeunes “ ont tendance à lancer leur CVC pour attirer des startups qui puissent aider à aider à développer leurs produits, pour financer leurs clients existants ou supercharge des partenariats go-to-market”. Quand on analyse combien de CVCs sont mis en place, il est donc important de toujours se rappeler que ce secteur n’est pas un monolithe uniforme, mais au contraire ses acteurs ont une diversité d’objectifs. 


Il est difficile de déterminer quels types de CVC sont le plus représentés parmi le haut niveau de créations l’année dernière. Mais si on part du principe que la nouvelle “promotion” d’acteurs CVC est similaire à ses prédécesseurs, on peut prédire qu’un nombre important de fonds ont été lancés à la fois avec l’objectif “returns-first” et “strategy-first”. Si on s’interesse également aux montants investis par les CVC, on constate également une expansion constante ces dernières années, comme l’indique l’image ci-dessous, produite par CB Insights. 



Pour les startups, cela signifie que leurs options de financement sont non seulement plus larges, mais aussi que le segment “corporate” du marché est plus profond que jamais. Il est donc probable que les partenariats et investissements corporate-startup sont voués à continuer leur développement, et à concerner un segment d’entreprises de plus en plus large et varié.

Original Article:

The venture capital boom of 2021 was not built from merely traditional VC money. A host of other capital sources played a role in the global trend, from new methods of disbursing angel and seed capital to crossover funds pouring into late-stage startups. And amid all the noise, record-setting totals, and rapid-fire dealmaking, corporate venture investors were busy, investing gobs of parent-company cash into far-smaller concerns.

 

Corporate venture capital, or CVC for short, is the method by which wealthy businesses build their own investing arm. Traditionally, these efforts blend strategic goals (M&A, early access to technology, partnerships) and financial ones (returns). The exact mix varies by company and CVC effort, but it’s rare to find a corporate venture concern that has none of one or the other. This makes their investing an interesting blend of traditional venture and corporate opportunism.

CVCs were busy last year. New data from CB Insights makes it clear that 2021 was a colossal period for CVCs, an all-time record by some metrics and a near-record year by others. CVCs are in the news lately as well, thanks to MongoDB – a NoSQL company that went public in 2017 – putting together its own fund, an event that the technology world took note of. MongoDB joins recently public companies like Coinbase in employing corporate investor work before reaching mega-cap status. The trend goes further: We’ve even seen private companies launch their own CVCs, evidence at once of the lengthening period in which high-growth tech startups stay private and the sheer amount of capital available to pre-IPO companies.

 

Today, we’re exploring the data behind 2021’s CVC investing boom with commentary from Serge Tanjga, SVP Finance at MongoDB. Tomorrow, we’ll dive into the hows and whys of CVC in the current venture climate with commentary from a number of corporate investing players — and even one public company that is choosing to not build its own investing arm. Sounds good? Let’s get into the data.

 

How quickly is corporate venture capital investment accelerating?

There are two ways to track the growth of corporate venture capital: The pace at which new CVC concerns are set up, and the rate at which the larger CVC segment invests.

We’ll take them in order. It’s clear that more CVCs are being compiled in the current market than nearly ever before. Indeed, CB Insights data indicates that some 221 new CVCs were created in 2021, a huge 53% increase on 2020 data. However, the 2021 result was actually fractionally lower than the 259 built in 2018. That said, 2021 was the second-hottest year for which we have data when it came to new CVCs reaching the market.

 

Tanjga, discussing the CVC market from a technology perspective, said that more mature tech companies “tend to set up CVC arms because they have excess capital to deploy, or because being in the VC space will help with their brand positioning,” while younger technology companies “tend to start CVC efforts to attract startups to build on their product, to fund their existing customers or supercharge go-to-market partnerships.” So when we discuss just how many CVCs are being built, keep in mind that they are not a monolith when it comes to goals.

 

We can’t tease out a perfect split of CVC focus from the pace at which new funds were put to market last year. But if we presume that the new crop of corporate venture players is similar to those that came before it, it is safe to infer that a good number of returns-first and strategy-first CVCs were launched in 2021. For startups, that means that their set of capital funding options is not only broader than ever, but also that the corporate portion of the market is deeper than ever.

Why do we care?