HSCM Bermuda helps finance $1bn Kin Insurance acquisition

Omnichannel Acquisition Corp, the publicly-traded special purpose acquisition company led by entrepreneur Matt Higgins, is poised to acquire Kin Insurance in a deal that will see the combined company listed on the New York Stock Exchange for around $1 billion.

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 combined company will be named Kin Insurance and is set for a period of rapid expansion. Kin currently operates in Florida, Louisiana and California, but has signed a stock purchase agreement to acquire an inactive insurance carrier that holds licenses in more than 40 states as it looks to rapidly expand into new states.

Kin believes it can more than triple written premiums in 2021 and achieve over $400 million of total written premiums by end of 2023, corresponding to a five-year CAGR of 139 percent.

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, which saw participation from NBA star Draymond Green and four-time major champion golf pro Rory McIlroy.

Kin presents itself as the only pure-play direct-to-consumer digital insurer focused on the complex and growing $100 billion plus homeowners insurance market. Its proprietary technology enables customers to insure their homes in minutes online, bringing convenience to a historically manual process.

It uses thousands of data points about each property to provide accurate pricing and produce better underwriting results. Having eliminated the need for an external agent and using more efficient technology, Kin promises to offer attractive pricing to customers without sacrificing margins.

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. Both Omnichannel and Kin boards of directors have approved the transaction.

Sean Harper, co-founder and chief executive officer of Kin, said: “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.”

Harper said the combinations mark a major milestone in Kin’s development. “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,” he said. “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 personalised insurance experience, and at Kin, we are building the home for better insurance.”

Matt Higgins, chairman and chief executive officer at Omnichannel, who also co-teaches a course on digitally native brands at Harvard Business School, said: “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.”

Higgins insisted the Omni team is already hard at work helping elevate Kin’s brand presence, expanding its acquisition channels and layering in the most cutting-edge acquisition tactics. “The pandemic compressed years of ecommerce adoption and upended industries overnight,” he said. “Now the future belongs to frictionless commerce, and the homeowner's insurance industry is lagging way behind. We believe Kin is well positioned to capitalise on that unmet demand for years to come.”