May 9, 2024

Go with the Flo

Hi there,

Here is this week’s Hot or Not.

Hot: Insurers x tech

Berkshire Hathaway’s “crown jewel” Geico reported a 174% quarter-over-quarter jump in underwriting profit, to reach $1.9B in Q1’24. 

Despite the gains, the conglomerate faced questions at its annual meeting on Sunday about the insurance company’s vulnerabilities vs. competitors like Progressive.  

Its big disadvantage? Data analytics. 

“One of the drawbacks that Geico is faced with [is that] it hasn’t been doing a good job at matching rate with risk, and segmenting and pricing product based on the risk characteristics. This has been a disadvantage at Geico for a few years now. We are trying to still play catch-up. Technology is something that is unfortunately a bottleneck.” — Ajit Jain, Vice Chair of Insurance Operations at Berkshire

Increasingly, the industry is moving in the direction of AI — from automated vehicle inspection to claims processing. 

Geico is ranked 42nd on the CB Insights Insurance AI Readiness Index. Progressive is ranked 23rd. 

See how prepared the top 50 insurance companies are to adapt to a rapidly evolving AI landscape in this report.

Not: PharmEasy valuation

India-based online pharmacy PharmEasy (aka API Holdings) just isht the bed in its latest financing. 

In 2021, it was valued at $5.6B. Its latest round valued it at just $710M. 

That represents an 87% valuation haircut. PharmEasy is now worth <40% of its total capital raised ($1.8B in both equity and debt).

In perhaps better news for discerning buyers, there might be some divestitures in the future.

Part of what made the PharmEasy narrative so alluring was its ambition to build a healthcare platform for outpatient care in India. 

As highlighted in its acquisition insights on CBI, PharmEasy's run of acquisitions in 2021 aimed to build "a vertically integrated healthcare powerhouse spanning pharmaceuticals (Medlife), diagnostics (Thyrocare), and supply chain (Aknamed)..."

PharmEasy paid over $600M for a majority stake in Thyrocare in June 2021 and $144M for Aknamed, a supply chain management platform for hospitals and medical manufacturers, in September 2021.

The leaner and more disciplined PharmEasy that is likely to emerge out of this massive downround financing will surely have investors looking at divesting non-core businesses and science projects.

And so expect some pruning to be happening at PharmEasy.

Hot: Quantum computing

Quantum computing is accelerating and could power new algorithms that are much more efficient at key tasks like: 

• Solving complex optimization problems
• Sorting through large datasets
• Running simulations

But quantum computers could also become very adept at breaking some of the most common encryption methods for protecting information online.

This is spurring enterprises to work with companies that can help transition to new “post-quantum cryptography” standards.  

From quantum computer makers to post-quantum cryptography, we simplify the quantum realm in this market map.

Not: Insurtech venture activity

Things were deafeningly quiet in insurtech in Q1’24.

Funding dropped QoQ to hit $0.9B — its lowest quarterly level since 2018.

And that’s not all. 

In Q1’24, insurtech saw: 

• 0 mega-rounds ($100M+ deals)
• 0 unicorn births (private companies reaching $1B+ valuations)

Bright spots were few and far between, but Europe stands out.

Last quarter, the region broke an extended drop in deal count and saw funding climb QoQ.

Dive deeper into the latest insurtech investment trends in our State of Insurtech Q1’24 report.

The +1

Fumble. What’s the best part of today’s newsletter? A: Tuesday

I love you.

Anand 

@asanwal 

P.S. Our analyst recently dove into the data behind our Insurance AI Readiness Index. Download the free briefing recording here.

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