Insurtech funding up in Q2, but lags 2021 levels
Although the amount invested was up, the number of deals fell 7.7% quarter-on-quarter.
During the most recently closed quarter, the global insurtech sector saw investments rise 8.3% compared with the prior quarter, according to Gallagher Re, which reported second quarter investments totaled $2.41 billion.
Despite the quarter-on-quarter growth, insurtech investments in 2022 are 50.2% below the total seen in the same period year prior, which was a record-breaking quarter, Gallagher Re reported.
Although the total amount raised grew quarter-on-quarter, the number of deals fell 7.7% quarter-on-quarter. However, the Q2 saw six “mega rounds,” according to the reinsurance broker and advisory firm. These mega rounds included four in the U.S., which raised a total of $948 million.
Overall, U.S. firms accounted for 45.5% of all deals during the period, while U.K. insurtech investments comprised slightly more than 12% of global totals. Reinsurers made up 28 of the Q2 investments.
Fewer P&C deals, total investment up
In Q2 2022, there were 92 deals involving P&C insurtechs, down from Q1, but total investment increased 5.9% to reach $1.49 billion, according to Gallagher Re. On the life and health side, investments were up 12.4%, totaling $918 million.
“Global markets have struggled since the beginning of the year, with even the most robust stock valuations taking a beating,” Dr. Andrew Johnston, global head of insurtech at Gallagher Re, said in a release. “Insurtechs, which are set to deliver growth and profitability over the long term, now present confident investors with an excellent opportunity to diversify their portfolios. A number of them will undoubtedly change the face of our industry, or parts of it, and in some cases are already doing so. As markets begin to recover, those insurtechs should rise to the surface with the utmost buoyancy.”
He added that recent downgrades to company values could spur M&A and divestitures that were unlikely to occur six months ago.
“It has caused some insurtechs to coalesce, and thrown cold water over many other insurtechs that previously considered themselves special or unique,” Johnston said. “In the wake of value realization, certain insurtechs should offload, and certain investors — even certain insurtechs — should acquire. For both sides of the trade, this moment could be seen as an enormous opportunity.”
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