TypTap, a five-year-old Florida-based writer about private property owners and flood insurance, attracted $ 100 million in funding from investment firm Centerbridge Partners.
The company plans to use the money to expand nationally.
TypTap said it obtained regulatory approval to do business in the states of New Mexico, Utah, Nevada, South Carolina, Mississippi, Indiana, West Virginia, Michigan, Montana and South Dakota. It also has pending approvals in nine other states, including Georgia, Massachusetts, Iowa and Illinois.
The company said it expects to hire between 50 and 100 people by the end of 2021.
“We will immediately start preparing TypTap for future growth,” said Paresh Patel, CEO of HCI and TypTap, in prepared comments.
TypTap was launched in 2016 as a private flood insurance provider in Florida, with support from the HCI Group. In the third quarter of 2020, TypTap reported $ 15 million in flood insurance premiums in Florida and was profitable, despite several hurricanes in the state.
In 2018, TypTap expanded to home insurance in Florida, generating a total of $ 15 million in premiums. That number reached $ 60 million in 2019, and last year the company recorded $ 100 million in property premiums.
The company uses an online platform to quickly quote and link policies. Algorithms and artificial intelligence drive the platform, which, according to the company, helps to identify policies that provide profitable results while mitigating risks.
The TypTap homeowner offering will be similar to what is available in Florida, but there will be nuances based on the needs and legal requirements of each individual state, Patel told the Insurance Journal in October when discussing expansion plans. The company will roll out gradually in the chosen states as it receives regulatory approval and appoints agents.
Although TypTap falls under the umbrella of insurtech, Patel said the company is “very agent-friendly”. Currently, 90% of TypTap’s business comes from agents.
Centerbridge’s investment reflects about 11.75 percent of TypTap, based on the company’s $ 850 million post-monetary valuation.
The agreement grants Centerbridge preferred shares with liquidation, dividend, redemption and other rights, along with a four-year guarantee to purchase 750,000 HCI common shares at $ 54.40 per share. According to TypTap, preferred shares are automatically converted into common shares as soon as an initial public offering reaching certain targets is completed.
Centerbridge can also appoint a director to the boards of HCI and TypTap.
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