HSCM Bermuda (Hudson Structured Capital Management), the ILS, reinsurance and transportation finance investment manager set up by ex-Goldman Sachs structured finance head Michael Millette, has led a reinsurance deal for high-profile insurtech company Metromile.
Metromile, one of the leaders in so-called pay-per-mile personal auto insurance, delivering its products through a smart driving app and telematics, was helped by broker JLT Re which designed a risk transfer and unique reinsurance agreement, with HSCM Bermuda leading the coverage and other reinsurers including MAPFRE RE participating as well.
Metromile said that the arrangement would provide it with “additional leverage for future growth” and that the pay-per-mile business model “creates a hedge against this trend making it very attractive to reinsurers because of the lower volatility in the loss ratio.”
“In addition, Metromile’s intelligent automation leverages machine learning for claims modeling, which lowers risk and further enhances the model’s appeal to reinsurers,” the company also explained.
“This reinsurance agreement provides continued validation that the pay-per-mile model is efficient and highly scalable,” commented Dan Preston, CEO, Metromile. “It also emphasizes our innovative customer experience and strong retention which is driven by our customers’ desire for technology-first solutions.”
Michael Millette, managing partner of HSCM Bermuda, added; “Metromile is a leader in the technological transformation of auto insurance. We believe that they analyze and select risk skillfully, and are happy to be their partner in this book of business.”
Eduardo Pérez de Lema, CEO of MAPFRE RE, said; “we are very satisfied with this agreement which reflects our commitment to support insurance projects that require innovative reinsurance structures and involve qualified partners.”
“JLT Re’s Insurtech and Transportation teams led by Gregg Holtmeier and David Johnson, worked with Hudson Structured Capital Management and MAPFRE RE to develop a bespoke risk transfer and reinsurance agreement that was made possible by Metromile’s innovation, attractive margin potential and high customer lifetime value,” Ed Hochberg, CEO of JLT Re (North America) Inc., explained “We are excited to embark on this journey with Metromile.”
Insurtech start-ups are increasingly leveraging efficient reinsurance capital to help provide the capacity required to fund further growth, with reinsurance capital offering an alternative to venture in some cases.
It’s encouraging to see the capital markets providing some of the backing in this case.
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