Insurtech deals down, investment up: KBW

Despite higher total investment spend, the number of insurtech deals fell by 30% in June from a year ago, mostly due to a significant slowdown in U.S.-based insurtech deals, according to the Insurtech Monthly Update from U.S.-based analyst Keefe, Bruyette & Woods Inc.

The overall number of funding deals declined to 20 in June, from 28 in the same month the prior year, largely driven by a decline in early-stage investments – those in the first or second funding rounds, KBW said in the report.

However, insurtech deals raised $324.5 million in new funding in June, up from $215.9 million in May and $109.4 million in June 2018, with most activity involving distribution and systems, data and analytics platforms, the report said.

“While we think distribution investments (agents, brokers, MGAs, MGUs, online price shopping platforms) will remain popular given the lower barriers to entry, we expect InsurTech investors to increasingly focus incremental investment spend on more mature distribution platforms,” KBW said in the report.

Non-U.S.-based companies accounted for 15 of June’s deals, with one-third of those United Kingdom-based, the report said.

Average funding per deal increased sequentially by $4.8 million and $12.3 million year on year, a trend KBW analysts believe will continue given investor preferences for investing in more mature and established Insurtechs, KBW said in the report.

June saw five Insurtech acquisitions in line with five acquisitions in June 2018, and modestly lower than May 2019’s six acquisitions, KBW said.