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PCS - Emerging Risks, New Opportunities

Vesttoo raises $6m Series A as it adds new investor Hanaco


Vesttoo, the technology company that uses proprietary artificial intelligence and machine learning solutions with the goal of helping companies assess and transfer risks to the capital markets, has raised a $6 million Series A round of funding, adding Hanaco Ventures to its list of backers.

vesttoo-hanacoVesttoo’s latest capital raise is designed to help it accelerate plans for its Insurance-Linked Program (ILP) offering, a solution that will allow investors to pledge high-quality assets as collateral and earn returns from reinsurance and risk transfer business.

Vesttoo is also creating a digital marketplace for insurers, reinsurers, and pension funds, which it says will have a focus on insurance-based alternative risk transfer and investments.

The $6 million Series A funding round was led by Hanaco Ventures, a New York and Tel Aviv-based venture capital fund that invests in emerging and late-stage start-ups.

“We are happy to have Hanaco on board. This is an exceptional vote of confidence in Vesttoo’s unique offering. We have a significant global deal pipeline with insurers from the US, UK and mainland Europe, and are looking forward to further scaling Vesttoo’s ILP and fully digital marketplace with Hanaco’s support,” Yaniv Bertele, CEO of Vesttoo commented.

Pasha Romanovski, Co-Founding Partner of Hanaco Ventures, added, “Vesttoo is disrupting the reinsurance industry. The company is building a digital marketplace and has already proven its ability to sign multi-year contracts with leading US and EU insurance and reinsurance providers. Hanaco Ventures chose to invest in Vesttoo because of the unique solution and the company’s impressive founding team who will have a big impact in this untapped sector.”

Vesttoo’s Insurance-Linked Program is designed to be a multi-billion security-based investment portfolio, focused on non-catastrophe insurance risks.

As we explained before, Vesttoo’s ILP Program will offer asset managers and pension schemes a way to access the returns of insurance and reinsurance like risks, by pledging securities to support short and mid-term Life and P&C alternative risk transfer transactions.

It’s a novel way to help investors make their existing high-quality assets work harder for them, while pledging them as reinsurance collateral to support transactions structured or facilitated by Vesttoo.

Vesttoo provided further detail today, saying, “The ILP program offers institutional investors risk remote investments in collateralized reinsurance deals, earning BB spread of AA uncorrelated risk in addition to the yield of their existing, high quality assets, with a significant global deal pipeline targeting first closing of $1B USD AUM within 12 months.”

In addition, the company is set to launch an electronic marketplace for risk transfer, which it says will, “allow insurers, reinsurers and pension funds to model, structure, price and place their offering online, while giving institutional investors direct access to the untapped market of alternative reinsurance and exceptional return on risk.”

With a focus on bringing non-catastrophe and more exotic lines of insurance and reinsurance business to the capital markets using technology to aid in their modelling, understanding and structuring, Vesttoo sees a significant opportunity to expand the insurance-linked securities (ILS) marketplace, something its new investor Hanaco clearly believes in.

Vesttoo says its strategy is to “bridge the funding gap in the reinsurance market,” while also increasing liquidity and facilitating the development of this ecosystem of offerings for those interested to transfer or invest in less typical classes of insurance business than are typically seen in ILS offerings.

You can watch a recent session from our ILS Asia event featuring Vesttoo here.

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