American Financial Group Inc. has taken a rare step for the company by buying an insurance technology company.
Downtown-based specialty property and casualty insurer American Financial (NYSE: AFG) paid $120 million in cash to buy machine learning and artificial intelligence company Verikai in December. The deal was announced late Tuesday.
San Francisco-based Verikai, founded in 2018, uses predictive technology to assess insurance risk. It provides insurance companies with risk reports to improve their underwriting process. It aims to help insurers increase new business, reduce losses and improve customer access to insurance products.
American Financial has formed strategic relationships with so-called insurtech firms but it doesn’t often invest directly in them, American Financial co-CEO Carl Lindner III said in a news release.
“We found Verikai to be an outstanding opportunity,” Lindner said. “We believe that artificial intelligence and machine learning will continue to have a significant impact on the insurance industry and see Verikai as a thoughtful and effective leader in the use of these technologies.”
Verikai will continue to operate as a standalone company serving insurance clients. Verikai CEO Jeff Chen will continue to run the company as a unit of American Financial.
“(American Financial’s) financial strength and support will provide the opportunity to grow our business by enhancing our ability to provide a variety of compelling products and innovative capabilities as a stand-alone insurance technology company,” Chen said in the release.
While American Financial hasn’t made many direct investments in insurtech, it has launched numerous initiatives in that area through partnerships. It has about 25 such strategic relationships now and another 15 to 20 in the planning or piloting phase, company spokeswoman Diane Weidner told me.
American Financial has worked with insurtech companies at its business units as well as in its IT area, in re-engineering processes and in its innovation strategy efforts, Weidner said. It has deployed those partnerships to enable digital experiences, improve processing efficiency and generate insights to assist underwriters and adjusters.
“These relationships have been instrumental in enhancing our specialty property and casualty product offerings across our portfolio,” Weidner said. “We believe that Verikai’s vision and ambition are a great fit with AFG’s entrepreneurial culture.”
