Jean-Bernard Duler, founder and CEO of San Francisco-based Esurance, confirmed today that the company had laid-off approximately one-quarter of its staff.
“We’re looking into either a merger or an acquisition by an insurance company,” Duler told the Insurance Journal. “Part of that deal requires us to basically lower the burn rate.
“The point we want to make, though, is that doesn’t change anything to our policyholders,” Duler emphasized. He added that nothing will change “in terms of the experience on the website- the interaction you have, the chat center, the call center- nothing has changed in the whole core product.”
Founded in 1998, Esurance, which sells personal automobile insurance directly to consumers, experienced rapid expansion during 2000 and currently operates in 24 states. Running on multiple platforms, the company had planned to add new products, including renters, homeowners and umbrella. However, Duler said that the company has cut down on all new developments in favor of focusing on its core auto business. Duler added that Esurance’s plans to expand into additional states would, however, continue.
Esurance, which Duler described as being set up to act as an MGA, formed a tri-party agreement with Argonaut Insurance Company, which issues the policies, and General Reinsurance Corporation, which reinsures the policies, assuming 85 percent of the risk.
Duler said he was not at liberty to disclose too many details of current developments.
“Our model makes a lot of sense, but it requires still cash in the next few months,” he said. “You just read the paper everyday [and] you see companies merging to consolidate some of the core compentencies…In our case, what we built, we put in a lot of value for the right buyer because we built technology that I think is second to none…That’s the technology that makes a lot of sense for an insurance company.
“An insurance company has licenses and capital, which is what we don’t have,” Duler continued. “It was our plan down the road to buy an insurance company to write this book of business. Now, we could be ahead of ourselves here and get an insurance company to buy us.”
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