Kin Insurance, Inc. and Omnichannel Acquisition Corp. (NYSE: OCA) Enter Into Business Combination Agreement; Transaction Implies An Approximate $1.03 Billion Combined Company Pro Forma Enterprise Value
Kin Also Announces Plans for National Expansion; Signs Agreement to Acquire Inactive Insurance Carrier with Licenses in More than 40 States
Kin’s Proprietary Technology Draws Upon Thousands of Data Points to Underwrite Home Insurance in Minutes – Without an Agent – Even in Challenging Climate-Impacted Geographies
Transaction Includes Commitment for $80 Million PIPE Led by HSCM Bermuda and Senator Investment Group, with participation from Gillson Capital, Park West Asset Management and other institutional investors
New Strategic Investors Include Joe Plumeri, Former Chairman and CEO, Willis Group Holdings; Stephen Ross, Jeff Blau and Bruce Beal of Related Companies, the most prominent privately-owned real estate firm in the United States; and Gary Vaynerchuk, CEO of VaynerMedia
Previous Series C Investors Include NBA All-Star Draymond Green and Four-Time Major Champion Golf Pro Rory McIlroy; Both Back Kin to Raise Brand Profile Across the Country
Kin Insurance, Inc. (“Kin”), an insurance technology company that makes home insurance easy and affordable, and Omnichannel Acquisition Corp., a publicly-traded special purpose acquisition company led by serial entrepreneur Matt Higgins and a deep bench of consumer operators, announced today that they have entered into a definitive business combination agreement. Upon closing of the transaction, the combined company will be named Kin Insurance, Inc. and is expected to be listed on the NYSE under the new ticker symbol “KI”.
“The Kin team has leveraged their decades of insurance and fintech experience to build a capital efficient company that is experiencing outstanding growth across the board, along with compelling and superior unit economics”
Kin, which currently operates in Florida, Louisiana and California, also announced today it has accelerated its ability to enter into new markets by signing a stock purchase agreement to acquire an inactive insurance carrier that holds licenses in more than 40 states. The proposed acquisition of the inactive insurance carrier and the business combination are both expected to close in the fourth quarter of 2021 following the satisfaction of customary closing conditions, including regulatory approval, and in the case of the business combination, shareholder approval. As Kin looks to soon expand its reach into new markets, the company announced NBA superstar Draymond Green joined four-time major champion golf pro Rory McIlroy in the recent Series C round as an investor, both of whom will assist in raising Kin’s profile across the country in current markets and in new geographies.
Company Overview
Kin is the only pure-play direct-to-consumer digital insurer focused on the complex and growing $100+ billion homeowners insurance market. Kin’s proprietary technology enables customers to insure their homes in minutes online, bringing convenience to a historically manual process. Future customer needs such as making a policy change or filing a claim are similarly automated and convenient. Behind the scenes, Kin utilizes thousands of data points about each property to provide accurate pricing and produce better underwriting results.
Because Kin has eliminated the need for an external agent and has replaced antiquated insurance technology with modern, more efficient technology, Kin can offer attractive pricing to customers without sacrificing margins.
Kin’s low cost structure, fast reaction time and data advantage enable Kin to adapt better to the increasingly volatile weather occurring throughout the country as the climate warms. The residential property market cannot function without homeowners insurance, because insurance is required by most mortgage lenders. By stepping into climate-impacted areas and offering cost-efficient insurance priced with sophisticated climate models, Kin plays a key part in helping our society adapt to climate change.
Kin appeals to customers of all ages, with an average customer age of 57, unusual for direct to consumer brands, which typically service younger customers. Kin’s customers have relatively high spending power, are embracing technology and generally recommend businesses they love to their friends and family. This provides Kin with a wealth of future cross-sell opportunities for existing and new customers with respect to potential additional home-related and insurance products.
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Management Comments
“The home insurance industry has been coasting for years on legacy technology and an antiquated way of interacting with customers. It is more than ripe for an innovative alternative and that is exactly why we created Kin – to provide customers with a better home insurance offering, better pricing and an overall better experience,” said Sean Harper, Co-founder and Chief Executive Officer of Kin.
“Access to affordable home insurance is challenging in regions that are impacted by climate change and severe weather; at Kin, our proprietary technology and deep data advantage enables us to best evaluate risk and price home insurance fairly for consumers. Our customers receive a simple, direct and exceptional experience that provides them with real savings and leaves them delighted and loyal to Kin. As a result, we are growing fast, generating attractive unit economics, and we believe we are well-positioned to significantly expand our market share moving forward.”
“Today’s announcement is a major milestone and validation of what we have built, as well as an important next step in our development,” continued Mr. Harper. “We are excited to enter the public markets with Matt Higgins and the incredible team at Omnichannel, who have a proven track record of building enduring direct-to-consumer brands, making them the perfect complement for Kin. We expect to use our strengthened balance sheet to further scale our platform to new geographies, accelerating the growth of our premiums and profitability. Consumers deserve an easy, affordable and personalized insurance experience, and at Kin, we are building the home for better insurance.”
“The Kin team has leveraged their decades of insurance and fintech experience to build a capital efficient company that is experiencing outstanding growth across the board, along with compelling and superior unit economics,” said Matt Higgins, Chairman and CEO of Omnichannel, who also co-teaches a course on digitally native brands at Harvard Business School. “Kin’s direct-to-consumer approach to insurance is a true differentiator and provides it with a clear-cut advantage versus the competition. As a result, Kin has an opportunity to reinvent and lead the massive homeowners insurance marketplace. The Omni team is already hard at work helping elevate Kin’s brand presence, expanding Kin’s acquisition channels and layering in the most cutting-edge acquisition tactics. The pandemic compressed years of ecommerce adoption and upended industries overnight. Now the future belongs to frictionless commerce, and the homeowner’s insurance industry is lagging way behind. We believe Kin is well positioned to capitalize on that unmet demand for years to come.”
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Kin Highlights
- Leading direct-to-consumer home insurance technology company that is expected to more than triple written premiums in 2021 and achieve over $400 million of total written premiums by end of 2023, corresponding to a 5-year CAGR of 139%, and to more than quadruple gross profit in 2021 compared to 2020
- Significant opportunity to further grow and scale in a vastly underserved market
- Direct-to-consumer model, along with scalable technology, that enables lower customer acquisition cost, resulting in a 7.9x LTV/CAC in Kin’s current markets and superior unit economics, even before factoring in numerous cross-sell opportunities
- Simple, personalized digital experience and ongoing engagement ensures optimal customer satisfaction and retention as evidenced by a 92% retention rate and a Net Promoter Score of 85 through the quarter ended March 31, 2021
- Proprietary technology automates and optimizes underwriting and a risk selection engine enables more competitive pricing while sustaining lower losses
- Best-in-class leadership team with multiple decades of experience in fintech and insurance to ensure a dynamic, multi-faceted approach toward growing Kin
Transaction Highlights
The business combination reflects an estimated implied pro forma enterprise value at closing of $1.03 billion, assuming no redemptions by Omnichannel’s public stockholders. The transaction is further supported by a fully committed $80 million PIPE at $10 per share of Class A common stock of Omnichannel led by HSCM Bermuda and Senator Investment Group.
The transaction is expected to provide Kin with approximately $242 million of cash at closing, which is in addition to the $80 million raised in the recent Series C financing. The funding will be used to support Kin’s continued growth in existing markets, expansion into new markets, new marketing channels and product portfolio expansions including new insurance and home-related products. Kin’s existing stockholders will be rolling 100% of their equity into the combined company and are expected to own approximately 74% of the combined company immediately following the closing of the business combination, assuming no redemptions by Omnichannel’s public stockholders. PIPE investors are expected to own approximately 6% of the combined company, and Omnichannel stockholders are expected to own approximately 16%.
The Boards of Directors of each of Omnichannel and Kin approved the transaction. The transaction will require the approval of the stockholders of Omnichannel and Kin, the effectiveness of a registration statement to be filed with the Securities and Exchange Commission (the “SEC”) in connection with the transaction, and the satisfaction of other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the fourth quarter of 2021.
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