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Workers' comp InsurTech Pie in early stages of exploring IPO

Pie Insurance logo with Swigart washington DC.jpg

Commercial lines InsurTech Pie is in the preliminary stages of work to go public via a traditional IPO, Inside P&C can reveal.

Sources told this publication that Pie, which had an initial focus on workers' comp, has engaged with investment banks with a view to a 2022 float.

The business was valued at approaching $900mn during its last funding round in March, and with the underwriter believed to be roughly doubling run-rate premiums, it would likely look for upwards of 2x this valuation depending on the timing of the move.

As of April this year, the business had run-rate premiums of $185mn, pointing to the likelihood of ~$250mn+ at this point.

The exact timing of the move is likely to reflect the strength of the broader equities market, including the performance of IPOs outside the sector, as well as the trading performance of the public InsurTechs - which has been abysmal this year.

Depending on the timing of decisions from other closely-watched players like Next Insurance and Coalition, Pie could become the first commercial lines underwriting InsurTech to trade publicly.

Pie has had a heavy early focus on the ~$50bn workers’ comp market, and operates in contrast to some direct distribution peers via an omni-channel distribution strategy that includes retail agents, wholesale brokers and online. Workers’ comp remains its key line, but it also now offers business owners’ policies, commercial auto, cyber, E&O and general liability.

The business was founded in 2017 in Denver by CEO John Swigart to target small customers in comp that he believed were underserved by the large carriers. It operated initially as an MGA.

In May 2020, it raised money to launch its own insurance company with backing from PE house Gallatin Point Capital and SiriusPoint, becoming one of the earlier InsurTech MGAs to become a full-stack player.

Pie acquired Western Select Insurance, an Illinois-based shell company from Premia in August to facilitate its pivot to full-stack.

Pie’s last funding round was in March when it raised $118mn in a Series C round at a valuation understood to be approaching $900mn, taking total capital raised since inception to ~$300mn.

The round was led by Allianz X and Acrew Capital, with existing investors Greycroft, SVB Capital, SiriusPoint, Elefund and Moxley Holdings also participating in the round.

Pie has previously indicated it has long-term ambitions to go public. Speaking to this publication back in April this year, Swigart said: “We have raised enough money to sort of have all the growth potential in front of us, and we don't need to be doing any more fundraising right now."

He continued: “We founded this business to build a profit-generating, high-growth business that hopefully deserves to be and should be a public company on its own.”

There was a surge of activity from InsurTechs looking to enter the public markets as part of a broader surge of technology IPOs in 2020 and into early 2021. This wave saw Lemonade and Root carry out traditional IPOs, and Metromile and Hippo go public via de-SPAC deals.

After Lemonade's initial success, the InsurTechs have found life in the public glare challenging. Metromile is trading 78% lower, Root is down 69% year-to-date, with Hippo off 64% and Lemonade the strongest performer at 22.5%.

The SPAC market meanwhile has run into major problems, with PIPE investors hard to secure, regulatory attention elevated and hundreds of SPACs on the hunt for deals with now-wary counterparties.

Despite the challenging environment, homeowners InsurTech Kin did agree a SPAC merger in July, while flood writer TypTap indicated in August that it had filed an S-1.

Pie declined to comment.

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