Ledger Investing raise $5m seed round for insurance securitization platform

by Artemis on April 5, 2017

Insurtech start-up Ledger Investing, which counts ex-AIG capital markets head Samir Shah as its CEO, is in the process of completing a $5 million round of seed funding to help it build out its insurance risk securitization platform and expand its team.

Ledger Investing is creating a platform that will allow insurance and reinsurance risks to be securitized and transferred to investors from the capital markets, as such it is one of the most relevant Insurtech start-ups to the insurance-linked securities (ILS) market at this time.

Ledger Investing

Ledger Investing is set to secure $5 million of seed financing from a number of extremely well-known Silicon Valley venture capital funds and some re/insurance market entities as well.

Participating in Ledger Investing’s seed funding round are Silicon Valley VC luminaries Accel Partners, early stage venture investment specialists 500 Startups, quantitative VC fund SignalFire, and insurance sector investors MassMutual Ventures LLC, global broker AmWINS, and Garrett Koehn the Western Regional Director of broking group CRC who invested on an angel basis, Artemis can reveal.

The range of backers is particularly impressive and will provide Ledger Investing with access to expertise from top Silicon Valley technology and internet industry investors, as well as access to insurance and reinsurance industry expertise and contacts that will prove valuable as it pursues its mission of efficiently connecting risk and capital.

Samir Shah, the ex-Head of Insurance Capital Markets at AIG, joined Ledger Investing as its CEO last year, bringing significant expertise in the world of catastrophe bonds and insurance-linked securities (ILS), as well as expertise and industry recognition.

Shah told Artemis that the $5 million seed round will provide the firm with a significant runway as it builds out the technology platform required to facilitate insurance risk securitization and transfer to the capital markets.

The funding round was “significantly oversubscribed” Shah said, and followed the Ledger Investing team holding meetings with numerous investors during and after its participation in and successful graduation from the renowned YCombinator startup program in Silicon Valley.

Shah explained to Artemis; “We deliberately set out to be backed by and become part of SV to take advantage of the deep expertise there in using technology to build high-growth marketplaces and to develop a good mix of expertise from outside and inside the industry.

“Having put ourselves through the paces of a SV startup from scratch, we are proud of our early accomplishments: being accepted by YC (100 in 7500 applicants approved), getting recognition in TechCrunch as among the top startups and building an excellent syndicate of investors that include prominent tech VCs in a large seed round of $5M.

“I am particularly excited about the network of connections we have built with co-founders of successful tech startups, including several prominent ones like AirBnB, Stripe, WhatsApp and Dropbox who have shared lessons learned on the unique challenges facing startups. In fact, our investors include several co-founders of successful startups who are more than willing to provide us the benefits of their operational experience.”

This Silicon Valley pedigree will offer significant benefits to Ledger Investing as it works on creating a platform that can scale to support a significant pipeline of insurance risk securitization.

The opportunity is enormous, as any platform that can offer a truly efficient and easy to use way to get even the most standardised risks more directly to capital market investors, in securitized form, could find it faces considerable demand.

Generating that demand is another piece of the equation for Ledger Investing now, an area Shah is spending a lot of his time.

“Having established a strong foundation to launch the business, we are now engaging with companies in p/c, life and health insurance who have reached out to us to be among the early adopters of the programmatic use of insurance securitization as a tool of capital management (rather than risk management). They believe that this will be a source of competitive advantage and sustained, improved financial performance.

“ILS to date has been limited primarily to catastrophe risk because of the widespread use of catastrophe reinsurance as a risk management tool. From a capital management perspective, however, it is better for all insurers to source 20%-25% of their total capital (across sectors and product lines) directly in the ILS markets on a long-term basis. It would improve their ROE, make earnings more stable, generate fee business, provide on-demand capital in response to hard/soft markets and, most importantly, provide real growth for the industry (as opposed to fighting over the same pie). Our platform will deliver that capability to the industry,” he explained.

Already the seed funding is set to be put to work in building out the Ledger Investing team, adding to the technology expertise and also bringing in industry experts who can help the Insurtech target client opportunities and introduce its platform to the insurance, reinsurance and capital markets.

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