Branch Insurance joined the ranks of Columbus unicorns Wednesday, valued at $1.05 billion in a $147 million private equity round.
Weatherford Capital led the Series C for the three-year-old digital home and auto insurer. Several other firms including repeat investors also participated.
"For too long, the insurance industry has been plagued by an overly expensive approach to customer acquisition, driving up the price of insurance. Branch's model is helping to ensure insurance is accessible for all," David Seider, principal at Weatherford, said in a news release.
The insurer is part of burgeoning insuretech community in a city that's home to several legacy insurers. Locally based digital auto insurer Root Inc. became a unicorn in 2018, but has struggled financially since its October 2020 IPO, the largest in Ohio history.
Branch sold direct written premium of $19 million in the first quarter – almost as much as the $20 million in all of 2021, according to filings with the Ohio Department of Insurance. Most of its business is in homeowner policies, and the greatest increase is in Texas, about half of premium.
CEO Steve Lekas and CTO Joe Emison founded the company in 2019, seeking to restore insurance to its original mission of leveraging community to protect individuals. On average policyholders save nearly $550 annually, according to the release.
Staff grew fivefold over the year to more than 400 – about half in Central Ohio, a spokesman said. Branch opened a Capitol Square headquarters last year.
Branch has launched in nine new states this year for a total of 28.
Branch had a 78% loss ratio of claims to earned premiums in 2021 – close to industry targets, unusual for a startup. But claims from 16 states in the first quarter were 1.5 times the premiums earned. For Ohio and Texas, its biggest market, the first and second quarters are the worst for homeowners claims, the company said, so those losses tend to even out over a full year.
The company added $27.5 million to its reserves, however, so has a $41.8 million in capital – far above the $2.5 million required by the state.
Legally named Branch Financial Inc., the company is registered as a public benefits corporation. It operates a nonprofit, SafetyNest, providing free coverage to uninsured drivers.
"We believe that by reintroducing the power of community through data and technology, we can lower the cost of insurance while restoring it to its original intent: a force for communal good," Lekas said in the release. Company officials were not immediately available for comment.
To save on advertising, Branch has partnerships with online services such as mortgage lenders, auto dealers and home security companies that offer a quote at the time of purchase. Those include Homepoint, OpenRoad Lending, and SimpliSafe.
The round follows $50 million Branch raised last year.
Ohio-based Narya Capital, with partners including Columbus-based Falon Donohue and U.S. Senate candidate J.D. Vance, also participated – in a large group including Acrew, AmFam Ventures, Anthemis, Gaingels, Greycroft, HSCM Ventures, SignalFire and Tower IV. Many are repeat investors.
Participating investor AmFam is the venture arm of American Family Insurance, which acquired Columbus' Bold Penguin.
With offices in Tampa and Dallas, Weatherford is a family-owned investment firm that focuses on fintech and software for governmental clients. The firm invested in Cincinnati-based insurer Coterie in November; on May 25 that startup cut its workforce by 20% to preserve capital in the financial downturn, the Cincinnati Business Courier reports.
Lekas and Emison lived in different states when they started Branch, and chose Columbus as the firm's home in 2019 after a data-driven search of every U.S. city with population greater than 150,000.
Branch joins Olive AI Inc. as a private unicorn in Columbus. Swedish unicorn Klarna has its U.S. headquarters in the city. CoverMyMeds, the city's first unicorn, has been owned by McKesson since 2017. Boston cybersecurity startup Immuta – a Drive Capital and Ohio Innovation fund company that also announced unicorn status Wednesday – has a significant Columbus office that's growing.
A non-exhaustive list of other local insuretechs: fast-growing Beam Dental, Bold Penguin, Matic, Battleface, Poppins Health and Medicaid plan Circulo.
