US-based Warburg Pincus plans to set up a digital general insurance company Oona Insurance (Oona) with an initial investment of $350 million, as part of a strategy to expand into digital insurance in Southeast Asia. The investment, which marks the biggest seed funding in an online insurance platform in the region, will further expand Warburg Pincus' footprint in Asia, where it has become one of the largest and most active investors, with total investments of over $3.5 billion in 17 companies, says GlobalData, a leading data and analytics company.
Sravani Ampabathina, Insurance Analyst at GlobalData, comments: "The investment follows Warburg Pincus's acquisition of two insurance companies - PT Asuransi Bina Dana Arta Tbk (ABDA) in Indonesia in March 2022 and Mapfre Insular Insurance Corporation (MIIC) in the Philippines in October this year. Both companies were part of the Spanish group Mapfre, which has announced its plans to exit from Asia."
The acquisition of ABDA and MIIC provides Warburg Pincus with a 2.8% and 1.4% market share in the general insurance industries of Indonesia and the Philippines, respectively. Over the course of next year, both companies will be rebranded as Oona.
Ampabathina continues: "The Southeast Asian general insurance industry exhibited a strong growth before the COVID-19 outbreak and these markets were also quick to recover from the pandemic, backed by the governments' expansionary measures and infrastructure developments. GlobalData forecasts the general insurance industry in Southeast Asia to grow at a CAGR of 6.6% over the next five years."
During the last couple of years, digitalization of the insurance industry has gained momentum with many big insurers in the region looking to expand their digital footprint. The launch of 5G, and the presence of online aggregators and insurtech companies will provide infrastructure support to companies like Oona.
Oona initially plans to sell motor, property, and group health insurance. It will later expand to travel and individual health insurance as well. This will help Oona venture into all major lines of business in the region as collectively, motor, health, and personal accident and health insurance account for 60-70% of the region's general insurance business.
Ampabathina adds: "Through buy-and-build strategy, which includes acquiring established general insurers and rebranding them under Oona, Warburg Pincus aims to expand in other markets in Southeast Asia and establish itself as the largest digital insurer over the next couple of years."
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