Hartford Business Journal

24 HARTFORDBUSINESS.COM | March 28, 2022 Hedging Risks Through venture funds, insurers bet hundreds of millions of dollars on new technologies, insurtech companies By Zachary Vasile zvasile@hartfordbusiness.com T wo major insurers with strong ties to Connecticut — Bloomfield-based health services conglomerate Cigna and Munich Re, the German parent company of specialty insurer Hartford Steam Boiler — have upped their venture capital capacity in recent months, channeling resources to smaller, newer firms that can and already have helped the investor companies navigate an evolving and increasingly tech-centered marketplace. The two insurance giants have different approaches to risk capital and have recently allocated hundreds of millions of dollars in fresh venture funding to seek out new investments. Cigna, through its Cigna Ventures wing, is interested mainly in helping develop tools and products it can fold into its health offerings to clients, while Munich Re's investment group, Munich Re Ventures, is focusing on "risk-transfer," or evaluating and predicting risk in the market and real world. Recent developments at both companies underscore the increasing importance of strategic venture investments in the healthcare and insurance sectors, which are being turned on their head by artificial intelligence, automation, telehealth and other emerging technologies. While some insurers dabbled in the venture world as early as 2000, the rise of insurtech and healthcare delivery technology and analytics means that few players can afford to sit on the sidelines anymore. Aside from Cigna and Munich Re, property and casualty insurer The Hartford makes investments through its finance and strategy department, and Rhode Island-based CVS Health, parent company of Hartford health insurer Aetna, operates a dedicated VC segment, CVS Ventures, which focuses on promising, early-stage companies. Nassau Financial Group has a Hartford insurtech incubator program called Nassau Re/Imagine. Jacqueline LeSage, managing director of Munich Re Ventures, helped launch The Hartford's venture operations, and prior to 2008, she said the venture capital world and insurance sector hadn't fully connected. That changed, she said, in 2013, when agribusiness conglomerate Monsanto acquired Climate Corp., which was developing data science tools to help farmers manage their crops and predict weather events. Venture capital began flowing to similar businesses, including insurance-related startups, putting the insurtech sector on the map. Within a few years, insurance companies began getting into the act. "Once you're in the sights of venture capital, it makes sense to engage with that ecosystem," LeSage said. "There are opportunities because there's a lot of tech and business model innovation. But there's also risk, because you don't want to be creating your own competitor." The city of Hartford has made a push to become an insurtech hub, although the pandemic set those efforts back. Several local insurers — including Cigna, Travelers Cos. and The Hartford — provided funding to help launch the Hartford InsurTech Hub accelerator, which attracted dozens of startup companies from across the globe to Hartford, to participate in three-month business development programs. The accelerator ended in 2020 after funding dried up. Earlier this month, Connecticut and the United Kingdom announced a cooperative agreement to form the so-called InsurTech Corridor, which aims to foster closer business ties between the partners and help build up their respective insurance technology industries. They've pledged to share knowledge and resources that would enable insurers in both territories to explore and expand into each other's markets. Next month, InsurTech Hartford, an industry trade group, will be hosting a two-day insurtech symposium at the Connecticut Convention Center. New partnerships Cigna launched Cigna Ventures in 2018 with an initial $250 million investment. Since then, the business has helped guide young partner companies and paved the way toward acquisitions for some of them, while also providing Cigna Tom Richards, Cigna's global lead of strategy and business development, spearheads the Bloomfield-based company's venture capital investment efforts. HBJ PHOTO | STEVE LASCHEVER

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