Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Softbank pushes link-ups as insurance strategy takes shape

Stock MarketsOct 16, 2018 06:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A man talks on the phone as he stand in front of an advertising poster of the SoftBank telecommunications company in Tokyo

By Eric Auchard and Simon Jessop

LONDON (Reuters) - Softbank's Vision Fund plans to pump more money into insurance, a sector it sees as both ripe for disruption and a potential booster for its bigger bets in cars, health and financial services, a Vision Fund executive told Reuters.

In the past year, the world's biggest private technology investor has backed China's largest online insurer ZhongAn (HK:6060) as well as PolicyBazaar, India's biggest online insurance distributor, and app-based U.S. home insurer Lemonade.

And these and other insurance bets totaling nearly $3 billion are just the start, Vision Fund dealmaker David Thevenon said. The Vision Fund has raised nearly $100 billion, almost half of it from Saudi Arabia's sovereign wealth fund.

"We believe that technology and how data is used, processed and collected is going to transform insurance," Thevenon said.

Softbank believes a new breed of "insurtech" companies can work with other firms within its portfolio such as local transport juggernaut Uber and office sharing firm WeWork to roll out new products and services to their massive base of clients.

Three of the 10 biggest investments in new digital insurance firms over the past year -- PolicyBazaar, Lemonade and Nauto -- were led by Softbank, according to data from Willis Towers Watson and CB Insights.

Including its stakes in ZhongAn and two units of China's biggest insurer, Ping An (SS:601318), it made half the dozen biggest insurance investments in the year to June.

"We are going to have to place several bets," said Thevenon, a former Google (NASDAQ:GOOGL) executive. "The nice thing about insurance is that this is so big, it's not exactly a market where you make one investment and you suddenly have 90 percent market share."

Insurtech will represent just under 10 percent of the global insurance market by 2023, or more than $400 billion in premiums, against just 4 percent in 2018, according to a recent Jupiter report.

SEEKING SYNERGY

At his annual SoftBank World event in July, CEO Masayoshi Son told an audience of its portfolio company executives to imagine a world in which customers of Paytm, a Vision Fund Indian payments company with more than 300 million users, could receive real-time insurance quotes from China's ZhongAn.

"Imagine how wonderful, how innovative," Son said.

Vision Fund investments range from chip design firm ARM to ride-sharing giants including Uber, DiDi, Grab and Ola and new financial and business services like WeWork.

But its willingness to make huge bets in areas like commercial real-estate and its close ties to Saudi Arabia have put parent company Softbank under pressure, and its shares have fallen 16 percent this month.

Son talks about how new artificial intelligence and big data technologies will tie his disparate investments together, though concrete examples are scarce.

An early example of insurance synergy could involve India's PolicyBazaar, which raised $200 million in June in an investment round led by Softbank.

The decade-old company is investing in new services including lending for medical and death expenses and subscription-based healthcare. It hopes these businesses will help it glean deeper insights into consumer behavior that in turn could be used by the companies that sell insurance on its platform to better package and price their products.

PolicyBazaar Chief Executive Yashish Dahiya said he's keen to work with Softbank's network of companies to develop these businesses.

The company is already working with Ping An Good Doctor, operator of a one-stop medical services portal with 200 million users in China, to develop an Indian version it calls DocPrime.

Initially this amounts to knowledge-sharing, but could eventually lead to a full-blown partnership or joint venture.

Ping An Good Doctor (HK:1833) has meanwhile formed a joint venture with ride-sharer Grab to expand its online healthcare services across six countries in southeast Asia.

Softbank's global tie-up this month with Toyota (T:7203) to develop driverless vehicle services, including ones they say could function as mobile shops or even hospitals, gives another glimpse of how its insurance investments could play out.

Announcing the venture, Son cited insurance as a plank in its broader transportation offering. Autonomous driving is still a legal no man's land where basic liability questions need to be settled, and new types of insurers could thus play a big role.

One such insurtech company is Nauto, a Silicon Valley-based start-up whose vehicle safety technology helps insurers assess how commercial fleet drivers handle their vehicle. Softbank and venture firm Greylock led a $159 million funding round for Nauto in July 2017, joining existing investors BMW, GM and Toyota.

WINNING OVER INSURERS

Softbank has also been in discussions with big insurers about partnerships or other tie-ups that could see them supply underwriting and regulatory know-how to the new-model insurance companies in its portfolio.

Reinsurers act as insurers to insurance companies, and their expertise in areas like mortality and longevity tables remains unmatched, industry experts say. Their vast reserves of capital act as a backstop to insurers, enabling them to shoulder the risks of hard-to-price markets.

In January, Softbank sought to take a stake worth as much as $10 billion in global No. 2 reinsurer Swiss Re (S:SRENH). Those talks ended in May, and Softbank and Swiss Re declined to comment on the reasons.

But Thevenon said Softbank continues to hunt for ways to accelerate the digital upheaval in the insurance industry, including tie-ups with unspecified reinsurance players.

"We have talked to big insurance groups to figure out where we can play, what might be interesting," he said. "There are several similar combinations and permutations about a bet we could place."   

Softbank pushes link-ups as insurance strategy takes shape
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email