EXCLUSIVE: “Mature Decisions” – Florian Graillot, astoryaVC in ‘The Insurtech Magazine’

There’s been significant M&A activity in the insurance sector over the past 12 months. Here, we spotlight some notable global takeovers, while insurtech investor Florian Graillot makes the case for mergers and acquisitions being a catalyst for positive change, – and often the only choice for growing startups

Not so long ago, Luko was a rising star of French insurtech, backed by $75million from top investors, including Accel and Speedinvest. But in June last year, the online home protection startup filed for bankruptcy. After a lot of troubled conversations with potential bidders, in January 2024 it was finally plucked from insolvency by Allianz Direct, which immediately got a 45,000-customer foothold in the French online direct insurance market.

The acquisition was worth around €4.3million. So what might this, and other deals, say about the viability of startups, and the insurtech industry, in general?

According to Florian Graillot, founding partner at early-stage insurance fund astoryaVC, the acquisition of Insurtech startups by established players is a trend that’s set to continue.

“In fact, I believed we would see a lot more [this year],” says Graillot. “There is a natural cycle. This is the end of the first wave; startups are now having to make decisions about how they will – or can – operate in the future.

“Perhaps some companies simply want to buy their opposition to increase their footprint or sustainability. But more often than not, these companies are facing choices.

“If they are profitable – fine. If not, do they have a plan B for reducing their costs, for reducing their runways? If so, they can also continue. If not, however, there is a stark choice – either go bankrupt or consider an M&A.”

For Graillot, in all likelihood, it ultimately comes down to one thing – cashflow.

“If a company is profitable, it doesn’t need money – or if it does require more, it’s easier to try and raise it,” he adds. “For many founders who don’t fit into that category – and who can’t reduce their costs at significant enough rates – an M&A is a tough but inevitable option.”

That said, M&As are not necessarily an admission of defeat. Instead, they represent an opportunity for founders and corporates alike to improve their offerings. Citing Akur8’s acquisition of Arius Reserving Solution, which allows the former to enjoy the latter’s US market access, Graillot says M&As will herald a new frontier of change.

“I believe the second wave of transformation in the sector is linked to digitalisation through acquiring startups,” he says. “Ultimately, there is a dual dynamic: startups seeking avenues for development, and corporates embracing technology to maintain relevance in the evolving insurtech landscape. These corporates are benefitting, in many cases, from acquiring nice portfolios or assets and also enhanced technology with a better user experience.

“Insurance is notoriously slow to embrace change – we are not that far ahead of where we were 10 years ago, unfortunately – but with all this in mind, I would say that these M&As should help speed up the journey of transformation. There are exciting times ahead, I hope.”

Zurich and Kotak General Insurance

DEAL VALUE: $670million
REGION: INDIA

Top of the deal table, Zurich’s $670million acquisition of Kotak General Insurance in June of this year represented the largest foreign investment in India’s general insurance market and the first by a foreign insurer since the foreign direct investment (FDI) limit was raised from 49 per cent to 74 per cent in 2021. Kotak General Insurance offers ‘customised products and services’, leveraging ‘state-of-the-art technology and digital infrastructure’, according to the announcement.

The deal, which saw Zurich acquire 70 per cent of the business, now rebranded as Zurich Kotak General Insurance, is aimed at capitalising on the projected growth of the general insurance market in India. Fuelled by economic prosperity (India is expected to become the third-largest global economy by 2030), regulatory support and an expanding middle class more willing to embrace the value of insurance, Zurich predicts that it will raise its headcount in India by 40 per cent over the next three years.

“These corporates are benefitting, in many cases, from acquiring nice portfolios or assets and also enhanced technology with a better userexperience”

AUB Group and Movo Group

DEAL VALUE: Not disclosed
REGION: UNITED KINGDOM

In August, Australia’s AUB Group Limited announced a significant expansion into the UK insurance market by acquiring an 80 per cent equity stake in the Movo Group. The Movo Group integrates a broking portfolio, an authorised representative network, and the insurance technology platform Durell Software, which is a provider of proprietary software for policy administration and front-office applications that handles more than £270million in gross written premium and serves around 189 clients, including 120 brokers.

Chubb and Catalyst Aviation Insurance

DEAL VALUE: Not disclosed
REGION: AUSTRALIA

In June, Chubb announced that it had acquired the Melbourne-based managing general agent that specialises in general aviation insurance for the Australian market. Chubb said that the acquisition would complement its existing aviation operations, such as Chubb Global Markets in London and the aviation hub established in Singapore in 2023, and help fulfil its ambitious plans in Australia and New Zealand.

Zurich and AIG

DEAL VALUE: $600million
REGION: GLOBAL

This summer, AIG sold its global personal travel insurance and assistance business, AIG Travel, to Zurich in a deal worth more than $600million. The business will be combined with Zurich’s travel insurance provider Cover-More Group, which focusses on digital transformation and travel risk management.

Cover-More says: “We deliver technology platforms and back our technology up with a team of digital optimisation architects, and CX specialists with the experience, knowledge, and insights proven to increase yield and add real value to customer-facing offerings.” The deal will make Zurich one of the leading travel insurers in the US and around the world.

Chubb and Healthy Paws

DEAL VALUE: $300million
REGION: UNITED STATES

In April, Chubb announced that it was acquiring Healthy Paws, a US-based managing general agent specialising in pet insurance, from Aon plc. Since 2013, Chubb has been the exclusive underwriter for the Healthy Paws pet insurance programme, which protects more than 500,000 dogs and cats across the US. Healthy Paws provides programme and claims administration via a digital proprietary platform.

Chubb said the $300million deal will allow the business to ‘amplify the impact of this esteemed pet insurance brand in a vastly underpenetrated market’.

Akur8 and Arius

DEAL VALUE: Not disclosed
REGION: UNITED STATES

Next-generation insurance pricing insurtech Akur8 acquired US reserving solution provider Arius from Milliman in September, to bolster its actuarial platform and extend its global footprint. Arius is a property and casualty reserving software, utilised by insurers and reinsurers to manage risk and enhance financial performance.

Known for its innovative tools and methodologies, Arius is used by 150 insurance and consulting clients, with more than 1,500 users. It followed up the Arius deal by successfully completing a £120million Series C funding round.

Axis Insurance and O’Neill Group

DEAL VALUE: Not disclosed
REGION: CANADA

Axis Insurance, an award-winning full-service brokerage offering a range of commercial, life, employee benefits, and wealth advisory services, announced that the O’Neill Group would become part of its business in September of this year.

O’Neill Group is one of British Columbia’s premier providers of employee group benefits, life insurance, and wealth advisory services. Axis, based in Vancouver, said the purchase ‘continues to build upon our existing benefits practice, and positions Axis Insurance well on its journey to become a leading national specialty brokerage’. This year, Axis has embarked on an aggressive expansion programme, acquiring several other brokerages in the region.

Axian Group and WiASSUR

DEAL VALUE: Not disclosed
REGION: AFRICA

A leading supporter of African startups, in September telecoms giant Axian Group became the second-largest shareholder in WiASSUR, an innovative early-stage insurance provider, based in Côte d’Ivoire. WiASSUR, a 100 per cent digital insurance broker, offers a range of insurance products, including auto, health, life, travel, and home insurance, with its B2B2C business model aiming to make insurance more accessible to African consumers via an online platform.

Axian said it aligned with its goal of accelerating digitalisation and financial inclusion across Africa.

ITM and Lumera

DEAL VALUE: Not disclosed
REGION: UNITED KINGDOM

UK pensions data firm ITM was acquired by European life and pensions insurtech Lumera in July.

ITM is a data management and technology solutions company working with many of the UK’s largest pension funds. As an integrated service provider (ISP) it has been at the forefront of dashboard development in the UK, and offers a broad range of services to support UK pension customers. Lumera says the deal will add to its offering in new markets, including “tech-enabled specialist services for data analysis, regulatory compliance assessments, de-risking and liability management, platform data migrations, data quality management, data cleansing and tracing”.

This article was published in The Insurtech Magazine Issue 11, Page 8-0