Homeowner’s insurance company Kin Insurance announced a SPAC merger Monday to accelerate the company’s growth into new states and expand its direct-to-consumer platform.
The SPAC Deal: Kin Insurance announced a SPAC merger with Omnichannel Acquisition Cop OCA valuing the company at a pro forma enterprise value of $1.03 billion.
The new investors in Kin Insurance include Stephen Ross and Gary Vaynerchuck. Kin Insurance counts NBA All Star Draymond Green and PGA pro Rory McIlroy as existing investors.
Public OCA shareholders will own 16% of the company after the merger. The deal is expected to close in the fourth quarter, with shares trading as KI on the NYSE.
About Kin: Operating in Florida, Louisiana and California, Kin Insurance is the only pure play direct-to-consumer insurance company.
The company uses proprietary technology to create an insurance estimate for customers within minutes and without using an external agent.
Kin has lower churn (8%) among customers compared to competitors like Hippo (13%) and Lemonade Inc LMND.
Kin Insurance Growth Projections: Along with the SPAC merger, Kin announced plans to acquire an inactive insurance carrier that has licenses in over 40 states. The company is planning for national expansion by 2025.
“Kin has an opportunity to reinvent and lead the massive homeowners insurance marketplace,” Omnichannel Acquisition CEO Matt Higgins said.
The investor presentation lays out Kin Insurance as being built for the digital era with competitors stuck in the past. Kin has lower customer acquisition costs and does not have to pay out recurring agent commissions thanks to its direct-to-consumer model.
“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,” Higgins said.
A marketing plan for Kin Insurance includes direct mail, social media and brand awareness campaigns.
The company lists auto insurance, life insurance, umbrella insurance and non-insurance products as future growth items.
Financials: Kin expects to triple written premiums in fiscal 2021. The company estimates it will grow written premiums at a compounded annual growth rate of 139% from fiscal 2019 through fiscal 2023.
Written premiums were up 200% year-over-year in the first quarter of fiscal 2021.
The company estimates fiscal 2021 revenue of $98 million with revenue growing to $234 million in fiscal 2022 and $431 million in fiscal 2023.
The company has positive gross profits now.
OCA Price Action: OCA shares were up 0.31% at $9.86 at last check.
Disclosure: Author is long OCA shares.
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