Insights

Despite the challenging macro environment, InsurTech continues to be an active category, with ~$2.6Bn in financing volume and ~$10.5Bn in M&A volume during Q3 2020

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Sector Report: Insurance Technology Q3 2020

EXECUTIVE SUMMARY

Despite the challenging macro environment, InsurTech continues to be an active category, with ~$2.6Bn in financing volume and ~$10.5Bn in M&A volume during Q3 2020

  • Financings in Q3 2020 (80) were in-line with the same period in 2019 (79), but the aggregate amount raised increased by ~56% year-over-year
  • M&A activity remains tempered with 22 transactions during Q3 2020 as compared to 29 transactions during the same period in 2019

Large financing rounds took place in Q3 but most were completed in September

  • Notable rounds in the quarter included Bright Health’s $500MM raise led by Blackstone/Tiger Global, Ki Insurance’s $500MM raise led by Blackstone/Fairfax, and Next Insurance’s $250MM raise led by CapitalG

Q3 M&A and growth investment deals are still getting done despite macro headwinds, and they heavily lean towards US transactions

  • Notable M&A deals included Roper’s $5.3Bn acquisition of InsurTech giant Vertafore and Clearlake Capital’s $900MM acquisition of insurance agency SaaS provider Zywave
  • $5.1Bn in growth capital raised YTD in the InsurTech space across 220 deals through September 2020

In the public markets Insurance Software companies are trading at 6.9x EV/ ’20E Revenue and at 20.7x EV/ ’20E EBITDA, leading public company valuations

  • Lemonade, GoHealth, and Duck Creek all conducted IPOs in the quarter with MediaAlpha and Root shortly thereafter
  • Additionally, Clover Health is expected to enter the public markets in the near future through a SPAC
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