TypTap, a five-year old Florida-based writer of private market homeowners and flood insurance, has attracted $100 million in financing from investment firm Centerbridge Partners.
The company plans to use the money to expand nationally.
TypTap said it has obtained regulatory approval to do business in the states of New Mexico, Utah, Nevada, South Carolina, Mississippi, Indiana, West Virginia, Michigan, Montana and South Dakota. It also has approvals pending in nine other states including Georgia, Massachusetts, Iowa and Illinois.
The company said it expects to hire between 50 and 100 people by the end of 2021.
“We will immediately begin preparing TypTap for future growth,” Paresh Patel, CEO of HCI and TypTap, said in prepared remarks.
TypTap was launched in 2016 as a Florida private flood insurance provider with backing from HCI Group. By the third quarter of 2020, TypTap reported $15 million in flood insurance premiums in Florida and has been profitable despite multiple hurricanes in the state.
In 2018, TypTap expanded into homeowners insurance in Florida, generating a total of $15 million in premiums. That number reached $60 million in 2019, and last year the company reported $100 million mark in homeowners premiums.
The company uses an online platform to quickly quote and bind policies. Algorithms and artificial intelligence drive the platform, which the company said helps identify policies that deliver profitable results while mitigating risk.
TypTap’s homeowners offering will be similar to what is available in Florida, but there will be nuances based on each individual state’s needs and legal requirements, Patel told Insurance Journal in October in discussing plans to expand. The company will gradually launch in its chosen states as it receives regulatory approval and appoints agents.
Despite TypTap falling under the insurtech umbrella, Patel said the company is “very agent friendly.” Currently, 90% of TypTap’s business comes from agents.
Centerbridge’s investment reflects about 11.75 percent of TypTap, based on post-money valuation for the company of about $850 million.
The arrangement gives Centerbridge preferred shares with liquidation, dividend, redemption and other rights, along with a four-year warrant to purchase 750,000 HCI common shares at $54.40 per share. According to TypTap, the preferred shares automatically convert to common shares once an initial public offering meeting certain goal posts is completed.
Centerbridge also gets to appoint one director to both the HCI and TypTap boards of directors.
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