At least 130 insurers round the world invest in venture capital funds, according to data provider Preqin, but just one has a dedicated corporate venture capital group in the insurance sector – New York-listed Hartford Financial Services Group.
The company said on its website: “As the only dedicated corporate venture capital group in the insurance sector, Hartford Ventures provides our portfolio companies and co-investors with unique insights into the insurance industry.”
Jacqueline LeSage Krause, vice-president, ventures and innovation, said: “Hartford Ventures is a strategic direct investment group tied to Hartford’s business divisions, but not to the investment management arm. Corporate venturing is one part of our broader innovation group that both invests in start-ups and acts as an internal incubator.”
The group is tasked with helping “get Hartford to the future faster by accessing emerging trends, technologies and business models through long-term external venture investments and partnerships”.
The idea of combining innovation and venture capital had been part of Hartford Ventures’ original remit a decade earlier but after a few deals, such as BuySafe and Insurance.com, momentum drifted for a few years and the company hired LeSage Krause to overhaul the group.
She said: “In late 2007, the company wanted to increase its emphasis on innovation to make sure the businesses had an eye externally on developing new capabilities and opportunities.”
Hartford Ventures makes minority equity investments in early and expansion-stage companies where it can have board observer seats usually by investing between $1m and $3m initially alongside venture capital firms.
Its two most recent deals have reflected the strategic as well as financial considerations of the group.
In the past 12 months, Hartford participated in the $14m series B and $15m series C rounds for Coulomb Technologies, a US-based provider of charging stations for electric vehicles, and teamed with GreenRoad, a technology provider that helps people drive more safely and with lower overall vehicle operating costs, in a two-year, non-exclusive, strategic alliance.
Krause said the investment thesis was primarily on both safety and understanding the future of the car. A secondary benefit was the two companies’ clean-tech credentials, which fit into other corporate initiatives.
she said Hartford was also looking for companies with which it could form a strategic alliance. In January, a month after its strategic alliance with GreenRoad, Hartford unveiled a technology-based risk management tool to help commercial fleet customers enhance the safety of their operations, which for the school bus programme meant partnering GreenRoad.
Although enterprise technology is on the radar, Hartford Ventures is primarily looking for companies that can help them get to the future faster in terms of customer experience or offerings.
However, Krause points out that in financial services in general there is an increased intersection between technology and financial services in these customer-facing areas as social media, mobile and cloud computing converge and people looked to deal with their portfolio online and while being mobile.
The group’s remit has also expanded to cover wealth management as well as insurance as the impact of the financial crisis and organisational change has resulted in greater support for corporate venturing and innovation among senior executives.
Krause said: "For a financial services firm, there are likely no bigger events than the recent financial crisis and a change in chief executive [Liam McGee joined in September last year from being president of the consumer and small business bank for Bank of America].
Through all this, there has only been continued commitment to innovation and venturing through both of these events at Hartford over the past two years, creating a tremendous opportunity for Hartford Ventures to put its model to work across the entire company."
She
Fact box:
Key people
Jacqueline LeSage Krause, vice-president ventures and innovation;
Tom Whiteaker, assistant vice-president;
Rohit Bodas, director of strategic investments;
John Hess, assistant vicepresident finance;
Andrew Amigo, counsel
Deals
Name Date
Coulomb Technologies 2009
GreenRoad Technologies 2009
BuySafe 2003
CEU 2003
Insurance.com 2000