Our Investment in Transforming How Insurance Companies Create Value – Ledger Investing, Secures $75 Million in Series B
By Brent MacDonald – Principal at Rising Tide
Long-term institutional investors looking for direct access to insurance assets that are uncorrelated with larger capital markets have poured money into the insurance industry. Thus, credit securitization increased from a $100 Billion asset class in 1980 to a $2.5 Trillion asset class in 2022. (S&P Global Ratings). Currently, only 1% of insurance is securitized, compared to 60% of the credit (CPCU Society). If 20% of insurance becomes securitized, it will represent a $5 Trillion asset class with over $2 Billion in commissions. The market opportunity is significant.
A technological company called Ledger Investing (aka Ledger) is upending how the insurance sector is financed. In order to give insurers the ability to generate significant value by securitizing insurance risk and give investors the chance to engage directly in a new and developing asset class, Ledger Investing, Inc. and Ledger Capital Markets, LLC were established. Ledger builds a scalable, affordable market for securitizing insurance risks by fusing financial engineering with software engineering. By issuing and distributing insurance-linked securities or ILS, the Company transfers risks from insurance companies to capital markets. In other words, Ledger converts cash flows from insurance underwriting into tradable financial securities. Insurance companies benefit from a more flexible capital structure and a better, more consistent return on equity. Investors also have access to a new asset class with unprecedented risk transparency that underlies insurance risks, enabling them to make sensible investment choices and evaluate the sufficiency of risk-adjusted returns. In an effort to make its transaction data even more readily accessible, the Company just launched a new tracker website that shows its premium progress and completed transactions, see the link below.
As of right now, Ledger has early and promising client relationships with insurers and related insurance premiums. The Company has agreements with investors on the risk-buying side and the team has placed $400 Million+ gross premium directly into the capital markets and is on track to exceed $1 Billion by the end of the year (2022). All this while sourcing funding in the casualty ILS market, including renewals and multi-year commitments.
With 600+ MGAs (Managing General Agents) in the US, Ledger is now able to expand its sales staff and further its value proposition of lowering the cost of capital for insurance risk, which benefits both current insurers and new insurance startups as well as consumers of insurance products.
Ledger Announces Secondary Trade for its Casualty Insurance Securitization
The first-ever secondary market trade of a casualty insurance security on Ledger Investing's marketplace was recently announced. Ledger's financial software stack allowed two experienced investors with very different investing backgrounds—one of whom had no prior exposure to insurance as an asset class—to study, assess, and price a diversified portfolio of casualty insurance risk. This deal was made viable as a result. This happened without having any effects on the risk creators or the paper backing them in terms of credit quality. The Company sees the lack of a secondary market as a sign that illiquidity premiums are being paid by risk originators, while also seeing secondary markets as key to helping investors in the market as well. Risk creators stepped into a broader realm for the first time and Ledger's open insurance system made it possible for this transaction.
Insurtech Startup Ledger Investing Raises $75 Million
In June 2022, Ledger announced that Company raised $75 Million in a Series B fundraising round. By providing openness, uniformity, and automation to the insurance industry's finance system, this new funding will support the company's expansion and allow it to hire 200 more people, furthering its purpose. Leading technology venture capital firms and savvy investors from the insurance sector support Ledger Investors.
Finally, An Open Insurance System to Connect Risk to Capital!
Watch the live Ledger Investing Premium Tracker here.
Read the $75 Million Funding Press Release here.