Newfront Insurance announces merge with ABD
Newfront Insurance, the San Francisco-based insurtech brokerage, has announced that it will imminently merge with ABD Insurance and Financial Services Inc.
The San-Mateo, California-based insurance giant ABD Insurance and Financial Services Inc is the 40th largest operator of its kind in the US, and reports show the company registered US$112.5mn in brokerage revenue in 2020.
The combined company is to be called Newfront and it will transform the delivery of risk management and employee benefit solutions.
Newfront's proprietary modern cloud-based insurance platform redefines the industry's antiquated model, unlocking new insights and an enhanced experience for clients., while ABD brings deep insurance expertise, an award-winning culture, and extensive experience in delivering innovative solutions to today's most complex risks, serving many of the preeminent global disruptors, including industry leaders in life sciences and technology.
The merger values the combined company at $1.35bn and is expected to close by the end of August
A joint statement released by the companies shows the combined companies will be headquartered in San Francisco.
In terms of employee changes, reports suggest Spike Lipkin, CEO of Newfront, will head the combined company. Kurt de Grosz, president of ABD, will be executive chairman, and Brian Hetherington, chairman of ABD, will be president of Newfront.
Newport Insurance was founded in 2017, and its lead investors are private equity firms Founders Fund LLC and Meritech Capital Partners LP. The company raised an additional $100mn in capital in 2020. It currently has a workforce of 200 staff and provides commercial property/casualty and employee benefits coverage.
Meanwhile, ABD employs 370 staff and was founded in 2011. An estimated 50% of its revenue is derived from commercial retail business, and about 40% is employee benefits.
Rise in insurance mergers post-pandemic?
Data shows that There were 407 completed mergers and acquisitions (M&A) worldwide in the global insurance sector in 2020. That figure, according to studies by Clyde & Co, is set to soar.
Market analytics predict that insurance M&A is likely to surpass 220 M&As in a six-month period for the first time since 2019 and could go even higher in the second half of the year.
CB Insights: US Insurtechs Are Competing In A Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.