Insurance Technology

InsurTech–Digital Transformation Becomes “The Norm”

August 2020

Dear Clients and Friends,

Marlin & Associates (M&A) is pleased to share our latest market update on the Insurance Technology (InsurTech) sector.

As we all continue to navigate through the ongoing COVID-19 pandemic, the need to adopt digital transformation technologies by the insurance industry has become a ‘must have’ from ‘nice to have’ to both meet customer expectations as well as stay competitive in an evolving marketplace.

The investors and acquirers have caught on and the markets’ appetite for InsurTechs have shown significant resilience in the face of the unknown. In the second quarter of 2020, capital raising volume was $1.6bn, nearly double the levels achieved in the first quarter, and was more than the amount of capital raised in the second quarter of 2019.

This trend appears to continue into the current quarter with IPOs of several InsurTechs and increasing m&a activity. The IPO of digital-first InsurTech Lemonade raised $319m, recent IPO of P&C software provider Duck Creek raised $300m, and health insurance focused distribution platform, GoHealth, raised more than $900m in its IPO. 

As you will see in the report, the momentum towards use of technology has inevitably led to m&a transactions in the field. We expect this momentum to continue. On the m&a front, several notable deals have been announced over the last few months. Thoma Bravo improved its initial offer for Majesco –core software provider that competes with Duck Creek –to $729m. Recently, Fineos (an Australian listed company) announced the acquisition of Limelight Health (US based company) for $75m. We expect many such cross-border deals to be completed in the coming months.

While the length and consequences of the pandemic are impossible to predict, there is definitely light at the end of the tunnel. As you also will see in this report, market values for publicly traded firms have continued to remain robust and both financing and M&A activity continues to gain steam though for select assets.

Please feel free to reach out to me (aagarwal@marlinllc.com) with any questions or to discuss this in further detail. We are keen to hear from you and happy to share what we are witnessing in the markets and how that could relate to your company.

Marlin & Associates is one of the most active investment banking and strategic advisory firms, providing trusted counsel to middle-market companies worldwide that offer enterprise and vertical application software, services, data and analytics –including firms across FinTech ecosystem (InsurTech, BankTech, Payments, WealthTech, LegalTech, GRC), Digital Tech, Business Intelligence, and Market Intelligence. Over the course of 18+ years we have advised more than 200 companies in 27 countries. Over the past 18 months we have advised on 18 successful m&a transactions.

Kind regards,
Anup

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