Leadenhall backs InsurTech focused “insurance challenger” Gryphon

by Artemis on June 15, 2017

Specialist insurance and reinsurance linked investment manager Leadenhall Capital Partners has invested in the launch of what is being called an “insurance challenger” start-up, a new initiative to launch an insurer that will leverage InsurTech and a fresh approach to protect more UK families.

Gryphon Group Holdings Limited, an entrepreneurial start-up that aims to launch disrupters into established sectors, has raised £180 million in funding to design and build what it terms an “insurance challenger” with the goal of offering more and better protection to UK families.

The initiative will focus on life insurance, critical illness coverage and income protection, to begin with, aiming to generate greater trust and an enhanced advisor experience, while making the most of the latest digital and cloud based technology to leverage InsurTech practices to create insurance products that are simple to understand, access and purchase.

Gryphon Group Holdings has raised the £180 million, with advise provided by Craven Street Capital Limited, from investors Leadenhall Capital Partners and Punter Southall Group.

It says the investors were “compelled by the insight and drive of the management team, and cite the significant market opportunity that exists for an insurance challenger who can use today’s technology to create a business which improves customer and adviser experience.”

Dan Knipe, Life Portfolio Manager at Leadenhall Capital Partners, commented; “Life protection is an area where good customer outcomes are vital, making a service focussed challenger an exciting proposition. We see strong growth potential for the business as the management team have a deep commitment to their vision and bring significant industry and technology expertise to make it a success.”

Jonathan Punter, CEO, of investors Punter Southall Group, added; “We already know there is a significant protection gap in the UK. This translates into a great opportunity for an insurance company that can solve the issues of customer trust and adviser experience. This company, with its new approach, will be well placed to meet these challenges head on.”

The “insurance challenger” will have an enviable leadership team from the off, with seasoned insurance and reinsurance specialists lined up, including co-founders: Chief Executive Officer, Daniel Pender, former Executive Director at Prudential and UK Life Chief Financial Officer at Zurich; and Chief Operating Officer, Simon Davis, former Chief Risk Officer at Guardian and Corporate Services Director at Admin Re.

Daniel Pender, CEO of Gryphon Group Holdings, commented; “The insurance industry plays a pivotal role in our society but there is work to be done to keep pace with the evolving needs of customers and advisers. We felt there was a tremendous opportunity for an insurance challenger to build a business around the people it serves, and in doing so, establish strong long-term relationships built on trust.

“We are creating what we think protection should look like in today’s digital age. Technology has moved on remarkably and our ambition is to embrace that, bringing an intuitive customer offer and adviser experience to market. This will give certainty to advisers when recommending our products and enable families to feel confident that we can offer the insurance that they need.”

It’s an interesting initiative for Leadenhall to get behind, but with the application of InsurTech set to disrupt established insurance categories, targeting life insurance products (an area Leadenhall is already a specialist investor) fits with the ILS managers mandates.

As we’ve written numerous times, bringing together the use of advanced technology through InsurTech, alongside a focus on customer experience, backed by the most efficient reinsurance capital (such as from an ILS fund manager), could upend the insurance business model we see today.

That approach and end-goal fits the model of such an “insurance challenger” perfectly.

Gryphon Group said that its investors recognise the “significant market opportunity that exists for an insurer with a truly people-centred, digitally-enabled business that is distributed through advisers.”

The start-up will work alongside platform technology partner Liss Systems, a UK company owned by Nasdaq-listed technology group, EXL, as well as digital interface technology partner Space.

CEO Pender, continued; “One of our key advantages is that from a technology perspective we are starting from a blank canvas with no legacy systems or constraints. This allows us to frame everything around the customer and adviser when creating the product, systems and processes. Ultimately, we want it to be intuitive, simple and easy.”

Guy Williams, Director, Liss Systems, core platform technology partner, commented; “We are excited by the team’s vision. We’re looking forward to playing our part in building what is sure to become a hugely successful insurance business which combines the potential of new technologies with a clear people-centred design.”

Nigel Edwards, SVP Insurance Europe & Head of UK Service, EXL, Nasdaq-listed technology group that own Liss Systems, added; “Driving innovation in the insurance sector is an important strategic priority for us at EXL. The business model will sit at the cutting edge of current insurance industry developments – providing more customer-centric products and services which deliver at those crucial policy ‘moments of truth’ for customers and advisers.”

Paul Brooks, Creative Partner, Space, digital interface technology partner, also said; “The insurance industry has been crying out for a challenger that is truly motivated by the idea of making things better for customers and advisers. We are delighted to be working with such an innovative business partner who has the conviction and ambition to reinvent protection from the ground up.”

It’s encouraging to see an ILS player backing such a start-up initiative and the fit is perfect. Gryphon Group will need access to efficient reinsurance risk capacity, a provider of which could end up being Leadenhall of course, and that would provide Leadenhall a way to access insurance risk from further up the chain, through an efficient and innovative front-end sales approach.

Bringing together advanced technology, great customer experience, flexible insurance protection products that meet users needs, and the backing of efficient capital markets, can be the future of a significant proportion of the re/insurance industry. Leadenhall is positioning itself alongside a start-up that could help to shift the insurance business model in this direction.

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