Deutsche Bank and UniCredit back $4.5 billion insurance startup Wefox with $55 million in fresh funds

Wefox, the $4.5 billion German insurance technology group, has raised $55 million of fresh funding from Deutsche Bank and UniCredit, two anonymous sources familiar with the deal told CNBC.

The company, which sells insurance plans via an online platform, raised the fresh cash in a debt financing deal from the two European lenders, according to the sources, who were not authorized to disclose the information publicly.

The deal was structured as a convertible debt agreement, meaning that the debt will be converted into equity when Wefox next raises cash, the sources told CNBC.

The fresh funding follows on from a $55 million debt round Wefox raised from JPMorgan and Barclays and a $55 million internal fundraise earlier this year.

As Wefox didn’t raise equity, its valuation remains unchanged at $4.5 billion.

It brings the total amount of funding Wefox has raised so far this year to $160 million and marks a vote of confidence at a time when the insurtech industry faces a grim macroeconomic environment.

The funds will be used to help eight-year-old Wefox accelerate its global expansion plans and double down on mergers and acquisitions, according to the sources.

Unlike other insurtech platforms like Lemonade in the U.S. or Getsafe in Germany, which offer insurance directly to consumers without involving brokers, Wefox works with a network of brokers, both in-house and externally, who distribute its insurance products.

Wefox is also pushing into a new model of selling insurance called “affinity” distribution. This is where the company sells its insurance software to other businesses for a subscription fee — for example, an online car dealer adding car insurance at the point of sale.

Wefox is backed by some of the best-known names in venture capital, as well as large institutional names in the traditional financial world.

Its VC backers include Salesforce Ventures, Target Global, Seedcamp, Speedinvest, and Horizon Ventures, while UBS, Goldman Sachs, Mubadala Capital Ventures, Jupiter Asset Management are also existing investors.

Wefox is also investing heavily in artificial intelligence, which has become a hot area of tech recently following the rise of viral AI chatbot ChatGPT.

Wefox mainly uses AI to automate policy applications and customer service. The company has three tech hubs in Paris, Barcelona, and Milan dedicated to AI.