- Kin Insurance Inc. going public through merger with Omnichannel Acquisition Corp. (NYSE: OCA)
- Direct-to-consumer business operates in states most exposed to natural disasters
- Home insurance has $105 billion TAM
- PIPE investors include Hudson Structured Capital Management, Senator Investment Group, Gillson Capital, Park West Asset Management
- Other investors include billionaire Stephen Ross, former chairman and CEO of Willis Group Holdings Joe Plumeri, CEO of VaynerMedia Gary Vaynerchuk
- Celebrity investors include golfer Rory McIlroy, as well as NBA player Draymond Green; entrepreneur Bobbi Brown is on the SPAC’s board
- Omnichannel led by Matt Higgins, longtime investor who has appeared as “Shark Tank” judge
- Kin Co-Founder and CEO Sean Harper is well known in fintech
Back in the old days, if you wanted home insurance you had to find an agent and then meet him in person to talk through your options. It was a time consuming, laborious process ripe for disruption.
Enter Chicago-based Kin Insurance Inc., an “insurtech” company that uses housing data to determine pricing and risks, and trims customer costs by eliminating the need for agents. The direct-to-consumer company is going public through a merger with Omnichannel Acquisition Corp., a blank-check firm led by Matt Higgins, a longtime investor who has appeared as a “Shark Tank” judge.
Home insurance has $105 billion total addressable market. The insurer surpassed $100 million in annual recurring premium after just 21 months as a carrier in an industry that still sees more than 90% of home coverage sold through brick-and-mortar agencies. Kin expects to more than triple its written premiums in 2021, and to hit more than $400 million in total written premiums by the end of 2023.
By using artificial intelligence, the company can approve an insurance policy in minutes instead of weeks. It also uses machine learning to target customers by running massive amounts of data through an algorithm, and acquire traffic with level of sophistication that no one else is doing.
Kin also reduces premiums if policyholders weather-proof their homes based on its advice. And by automating back office operations, it can focus its human efforts on the customer relationship. The average age of a customer is 57, and prefers a digital experience. Kin’s speed is a major advantage for people who want a mortgage fast but can’t get it without insurance.
The company is planning on expanding its offerings, but for now the focus is large coastal states where the weather is more volatile. Instead of fleeing catastrophe-prone states like some large insurers, Kin is diving in headfirst, with the idea that climate change is a reality that insurers will all have to adapt to eventually.
Kin operates in Florida, California and Louisiana, and hedges risk with its huge data advantage. It can take up to a year to be granted insurance licensing from states, but the way around it is to acquire insurance companies that already have existing licenses in other states. To that end, Kin recently agreed to buy an inactive insurer that has licenses in roughly 43 states.
Kin Co-Founder and CEO Sean Harper is well known in fintech, having founded a company called FeeFinders that was acquired by Groupon. Omnichannel is led by Matt Higgins, who is also an executive fellow at Harvard Business School. Higgins is also CEO of RSE Ventures, an investment firm that has made bets on companies including David Chang’s Momofuku, Bluestone Lane and & Pizza on behalf of billionaire Stephen Ross. Higgins is also a vice chairman of the Miami Dolphins.
Higgins is spearheading a marketing campaign using micro-influencers to accelerate growth at Kin, which benefited from increased e-commerce adoption throughout the pandemic. Brand builders in video’s such as Kin’s “Florida Man” campaign, help the company build top of the funnel awareness.
In Florida, which has a TAM of $14 billion, the number one cause of losses is related to roofs. The state is also a leader in fraudulent claims, which Kin has had success in halting through the use of data and its anti-fraud provision in policies.
Kin’s unit economics separate it from competitors. Its customer lifetime value to customer acquisition cost ratio is 7.9x, which is higher than comparable companies like Hippo Holdings, Lemonade, Inc., Root, Inc. and Metromile, Inc. It also has a higher retention rate at 92%.
Turning to valuation, Kin trades at a reasonable 15 times 2022 gross profit. That compares with a multiple of 51 times for Lemonade, according to Sentieo, an AI-enabled research platform.
Investors Hudson Structured Capital Management and Senator Investment Group are leading the PIPE, with participation from Gillson Capital and Park West Asset Management, among others.
Individual PIPE investors include Related Cos. executives including billionaire founder Stephen Ross, CEO Jeff Blau and President Bruce Beal Jr., as well as Joe Plumeri, the former chairman and CEO of insurer Willis Group Holdings, and Gary Vaynerchuk, CEO of VaynerMedia. Celebrity investors include golfer Rory McIlroy, as well as NBA player Draymond Green.
This is a mission-driven company with great management in a change-resistant industry. Its stated desire is to remove all friction from buying experience. Investors have an opportunity to get in early on a future behemoth—and they can say bon voyage to agents.
Jarrett Banks, Editor-at-Large