Home insurance insurtech agency Hippo plans to acquire New Jersey-based Spinnaker Insurance Co., an insurer with which it has has had a three-year partnership.
The deal, first reported by Carrier Management, is designed to help Hippo – a managing general agent – expand the geographical reach of its modern home insurance policies, which also include smart home monitoring kits.
Neither side disclosed financial terms, but a Hippo spokesperson said, “Hippo paid an appropriate multiple of book value commensurate with other fronting carrier transactions of similar size and quality.”
Spinnaker is a New Jersey-based national property/casualty insurer licensed in all 50 states that employs about 10 people, versus 280 at Hippo.
Hippo said Spinnaker has been its largest carrier platform partner since 2017, and noted Spinnaker-backed Hippo products are sold currently to consumers in more than 18 states. Hippo claims the partnership helped grow Spinnaker’s premium by $32 million in 2017, $80 million in 2018 and $200 million in 2019.
Hippo Chief Insurance Officer Richard McCathron said that the Spinnaker acquisition reflects a “natural next step” toward growing its “proactive home insurance” offerings.
“Spinnaker knows the complexities of our industry, mirrors our same standards for technology innovation and customer experience and has continued to meet, oftentimes exceeding, our expectations over the years, McCathron said in prepared remarks. “We’re proud of the progress we’ve made as partners and look forward to closing the acquisition.”
Spinnaker CEO Dave Ingrey said that Spinnaker has pioneered a number of products since its 2015 debut. “Since launching in 2015, Spinnaker has pioneered the concept of value-added fronting: working to create products that benefit the policyholder, the producer and the reinsurer,” Ingrey said in prepared remarks. “We know Hippo shares these ideals…”
Hippo sells its insurance products online and offers smart home device kits with each policy. Spinnaker, rated A- by A.M. Best, uses program administrators and managing general agents to access niche markets with a focus on short-tail business. Spinnaker focuses on homeowners, renters, small commercial, as well as some specialty lines and fronting opportunities, the companies said in their announcement.
The acquisition will close pending regulatory approval. Once that takes place, Hippo said the firm will join its “family of companies.” In late November 2019, Hippo purchased Sheltr, a San Francisco-based startup designed to provide home wellness checkups. Hippo closed the deal using both cash and stock.
After the deal concludes, Hippo will still operate as a managing general agent, with a portion of its premiums underwritten by its affiliate Spinnaker. The balance will be underwritten by other carrier partners.
Spinnaker will operate independently under the Hippo umbrella and maintain its position as an insurance program and fronting company. Spinnaker will continue to service and grow its portfolio of program administrators.
Hippo would not disclose how it is acquiring Spinnaker, but the spokesperson said “Hippo is fortunate to have ample capital and support” from its investors that help it “move on strategic opportunities when they arise.” The company has raised $209 million in venture financing to date.
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