Life-insurance startup Ethos [1] in May 2021 raised USD 200 million in a funding round valuing the business at more than 2 billion. The San Francisco, California-based company previously had raised a total of USD 100 million.
Ethos is a producer and a third-party administrator (TPA) for life insurance carriers. Its platform allows customers to purchase life insurance policies online. Currently, the company works with a list of carriers that includes Legal & General America, Ameritas Life, AAA Life, and TruStage.
Ethos expects to reach more than $100 million in annual revenue in 2021.
According to the company, the funds will be used to finance growth, including new product offerings and international growth. The investment is led by venture capital firm General Catalyst and includes several previous investors such as Sequoia Capital, Accel and GV. General Catalyst also has invested in insurtechs such as Oscar Health and Lemonade.
As a comment, the USD 2 billion “valuation” of Ethos, a broker-TPA, implies a 20x multiple over (hoped-for) sales, whereas insurance distributors usually trade for 1 to 3 times annual revenue. It looks like being an insurtech – as opposed to a plain vanilla insurance sales organization – adds a zero to valuations. How much of that enormous difference is justified remains to be seen, but the switch to online, tech-supported sales and marketing in individual insurance is well under way, and the day of reckoning may sooner than many realize.
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