Getsafe, a digital insurtech startup based in Germany, acquired the German portfolio of Luko, a French insurtech startup that recently came close to insolvency before agreeing to be acquired by British insurer Admiral Group in a transaction that did not include its operations in Germany or Spain.
Getsafe is present in four countries since its expansion to France. Luko's own expansion in Germany dates back to 2022, when it acquired German startup Coya, and it is largely its former customer base that Getsafe is now taking over. “Approximately 90% of Luko's German customers are former Coya customers,” said Getsafe CEO and founder Christian Wiens.
When asked if Getsafe had also attempted to acquire Coya at the time, Wiens said the two companies only had "vague discussions" that "never materialized." Luko was more serious about his interests, because with the acquisition of Coya he would obtain an insurance license from the Federal Financial Supervisory Authority (BaFin); Getsafe did not need this as it had already obtained its BaFin insurer license in 2021.
The announced acquisition, which Getsafe says was approved by BaFin, has nothing to do with licensing and everything to do with Getsafe's growth objectives. Following the acquisition of Luko's German portfolio of 50.000 policies, including liability, pet and home contents insurance, Getsafe now has 550.000 customers across Europe, up from 400.000 before the French expansion in January this year.
The terms of the deal were not disclosed, so not much is known about what will help Luko pay off his debts. But he gives a new home to a German customer base that Admiral was not interested in taking on. Over the summer we learned that the British group was primarily looking to accelerate and diversify its growth in France, where its subsidiary L'Olivier made a name for itself with motor insurance.
Operating profitability
L'Olivier CEO Pascal Gonzalvez last July mentioned that Luko's track record of launching new products quickly and in multiple countries had been key in the deal with Admiral, as it demonstrated that future launches and integrations would be rapid. He seems to have also helped in Germany: “The post-merger integration took us only a few weeks. From a technical point of view, integrating Luko Insurance's customer base was as easy for us as launching a new product,” Wiens said in a statement.
In remarks, Wiens provided more details about what facilitated what is typically a lengthy process. “A portfolio transfer would take current insurers several months (in most cases years) due to inconsistencies in computer systems. […] We learned from the mistakes of the old economy and built our proprietary platform in a modular way so we can easily scale and adapt our infrastructure as we grow,” he said.
Another big difference between traditional carriers and Getsafe is that it sells its insurance products directly to its customers (DTC), mostly a younger demographic, and with a mobile-first strategy. According to the company, 35% of its customers use its application every month. Wiens said that “10% of the use is to file a claim and 90% of the use is to explore more insurance options or get more information about protection.”
The ability to sell more products to the same customer may be what Luko was missing: for a long time it only offered home insurance. Luko focused for too long on one single product strategy (monoline),” Wiens said. “Especially in a direct online marketplace, it is difficult to amortize customer acquisition costs if you fail to become the one-stop insurance partner for them.”
Getsafe's multi-product and DTC strategy appears to be paying off; Although it did not reveal figures, the company said that it "again doubled revenue after quintupling it the previous year and achieved operational profitability in its main markets." He also added that his revenue per customer "has doubled every year since Getsafe's inception."
Wiens noted that Getsafe's DTC strategy results in higher margins and he remains optimistic about that. “DTC is the only way to fundamentally disrupt insurance,” Wiens said. Not everyone agrees; Its German rival Wefox relies on distribution partners, and Wefox's own insurance business has lost priority compared to the distribution business.
With 32 million euros of losses in 2022 (around 33,8 million dollars), Wefox is organizing its executive team by naming a new chief financial officer “as we focus on driving profitable growth and expanding our international footprint through acquisitions,” CEO Julian Teicke said in a statement.
In May, Wefox raised $55 million in a revolving credit facility from JP Morgan and Barclays at a fixed valuation of $4.500 billion, the same as its $400 million Series D round in July 2022. Getsafe raised a much smaller amount of funding to date. 120 million euros, around $127 million, including an extension of the round Serie B in 2021, and it will be interesting to see which strategy bears more fruit: more or less financing? DTC or not?
