FinTech: Hippo Insurance Gets $350M Funding From Mitsui Sumitomo Insurance
This follows Hippo’s funding in July of $150 million.
Hippo, the home insurance unicorn, announced Tuesday an investment of $350 million from Mitsui Sumitomo Insurance Company, Limited, a subsidiary of MS&AD Insurance Group Holdings, Inc. In July, Hippo raised $150 million in a Series E round worth $150 million. The round valued it at $1.5 billion, post-money. (Silicon Valley Business Journal)
According to Reuters, Mitsui Sumitomo Insurance bought a convertible note in Hippo that will turn into an equity stake the next time it raises new funds. Also included is a potential reinsurance deal between the insurance startup and Mitsui.
The latest transaction “solidifies the strategic partnership between the two companies, which began with MS&AD Ventures’ initial investment in Hippo’s Series E funding round in July 2020,” Hippo said in a statement.
Hippo’s valuation not specified
Hippo Chief Executive Officer Assaf Wand told Reuters that the valuation of $1.5 billion in the July round was no longer relevant given Hippo’s growth and the market developments.
The pandemic has boosted business at insurtechs because customers have shifted to negotiating and buying insurance online.
However, Wand declined to reveal the latest valuation of the startup.
Hippo’s rival and property and casualty insurer Lemonade Inc. (NYSE: LMND) issued shares in its IPO at $29. The shares commenced trading on July 2, and are now trading at $69, delivering a gain of about 138% on the IPO price. The shares touched a high of $86 in July. The listing shows how bullish investors are on the insurance tech sector.
U.S. housing market boom
U.S. home prices surged 7% annually in September, up from a 5.8% annual gain in August. For perspective, this gain is the largest seen since September 2014. Moreover, home prices are now ruling 23% higher than their previous peak in 2006.
The reasons for the surge in home prices are low mortgage interest rates, a crunch in housing supply, and new demand emanating for second homes due to the virus pandemic.
“Heading into winter, demand continues to be strong, driven by mortgage rates which have broken record lows 13 times this year and a growing list of companies which have extended their remote work policies well into 2021,” said George Ratiu, senior economist at realtor.com to CNBC.
These robust conditions are likely to be beneficial for home insurers such as Hippo.
Use of money
Hippo will use the money for capitalizing its insurance and reinsurance companies and for expanding its product to additional states.
By next year, it plans to address 95% of the U.S. homeowner population.
Its insurance products are already available to over 70% of homeowners in the U.S.
Related Story: Hippo, The Home Insurance Unicorn, Raises $150M
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