Property and casualty insurers are rich as Croesus, awash in capital and having a tough time figuring out where to put it. They can certainly invest (and largely do) in the equity and bond markets, but the paltry returns give deep pause for additional consideration. So a few insurers are stashing at least some of their cash in a venture capital fund.

Executive Summary

As cash piles grow bigger, property/casualty insurers that have had limited success in launching new technologies to support their businesses are now opting to buy rather than build. Some are finding new investments in technology startups as they launch venture capital funds.

Over the last two years, roughly a half-dozen property/casualty insurers have formed venture capital funds, among them AXA, XL Catlin and American Family. Not only do these funds present the possibility of big winnings by betting on an investment in a unique startup venture, these same ventures may be of use to the companies in their underwriting, claims management, and customer sales and marketing strategies.

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