Next Insurance Secures $250 Million Funding, Reaching $4 Billion Valuation

Next Insurance has recently completed a funding round of $250 million, resulting in a company valuation of $4 billion. This latest investment follows a previous $250 million raise in September 2020, when the company was valued at $2 billion.

The funding arrives after Next Insurance’s acquisitions of both Juniper Labs in December and, more recently, AP Intego.

Focus on Small and Medium-Sized Businesses

Next Insurance provides insurance coverage for small businesses across various categories, including workers’ compensation, commercial auto, and general liability. These services cater to a diverse range of professions.

For example, the company serves fitness businesses and construction companies. Next Insurance’s strategy centers on its capacity to accurately price coverage for different industries, enabling rapid growth in gross written premium (GWP) through attracting numerous small businesses and offering additional products.

Insurtech Market Context

This new funding and valuation for Next Insurance occur during a period of fluctuating performance within the insurtech sector. The share price of Lemonade, a prominent rental-insurance company, has experienced a decline.

Lemonade represented an early public offering within the tech-enabled, neo-insurance market.

Public Market Performance of Neo-Insurance Companies

Root Insurance, a car insurance technology startup, also went public but has faced challenges since its debut, including a decrease in value and legal disputes, despite meeting investor growth expectations.

MetroMile, another automotive-focused neo-insurance company that went public through a SPAC merger, has shown inconsistent trading results. Hippo, specializing in home insurance, is planning to go public via a SPAC at a $5 billion valuation.

The performance of these companies presents a mixed picture, with both positive indicators and disappointing trading outcomes.

Investor Confidence in Next Insurance

Despite some market volatility, Next Insurance’s investors remain optimistic about the company’s prospects. This confidence may be justified given the company’s recent growth.

Next Insurance reports that its GWP doubled in the six months following its last funding round. This growth supports the doubling of its valuation, as private investors were willing to pay a premium based on GWP multiples.

Growth in Gross Written Premium

Next Insurance achieved a GWP run rate of $100 million in February 2020. By February of the current year, the company had reached a $200 million GWP run rate.

The company’s GWP is now even higher, factoring in a few months of additional growth and excluding the contributions from the AP Intego acquisition, which held approximately $185 million in active premium at the time of the deal announcement.

Clarification on GWP Metrics

TechCrunch sought clarification from Next Insurance regarding the timing of the GWP doubling and the inclusion of the AP Intego acquisition in those figures.

CEO Guy Goldstein confirmed via email that the GWP doubling referred to the 2020 figure and was calculated prior to the AP Intego acquisition. Therefore, the company’s current GWP run rate is likely significantly above the previously reported $200 million.

Future Plans and Potential IPO

When questioned about the trend of companies going public via SPACs, and whether Next Insurance would consider this route, CEO Guy Goldstein stated that the company is continually evaluating its options.

However, he emphasized that the primary focus remains on expanding the business.

This response suggests that Next Insurance is not ruling out an IPO, but it is not currently prioritizing it.