Analysts at KBRA have suggested that there is an opportunity for Swiss Re to invest additional capital into Granular Insurance Company, a recently established precision risk company created by Verily.
Granular is an accident and health insurer that focuses on an precision risk-based employer stop-loss (ESL) market, which was set up by the life sciences and healthcare subsidiary of Alphabet, the parent of Google.
ESL is a segment of commercial insurance that protects self-funded employers from unexpected and large employee health benefit claims by reimbursing employers for claims above a defined amount.
During the first three months of 2021, Granular reported premiums of $26.8 million and capital and surplus of $53.6 million, although it still recorded a net loss of $8.6 million for the period.
KBRA believes Verily and Swiss Re are both well positioned to fund GIC’s potential future capital needs, and analysts maintain a stable outlook on the company, based on the expectation that it will maintain sound capitalization and successfully build its position in the employer stop-loss market.
Additionally, KBRA expects Granular to retain key members of its management team, grow at a sustainable pace relative to its resources, receive capital and operational support from Verily and Swiss Re, and preserve financial flexibility through conservative balance sheet metrics.
Granular plans to combine health technology solutions with novel insurance and payment models, using a precision risk approach is able to more accurately assess risk, and ultimately help self-funded employers to control cost volatility through a data-driven model within the traditional ESL market.
The insurer will leverage Verily’s technical expertise integrating hardware, software and data science and KBRA notes that it will also benefit from Swiss Re’s operational and insurance risk expertise and reputation as a minority investor.
As a newly formed insurer, KBRA anticipates the company will incur manageable operating losses and surplus declines in the near-term.
However, analysts believe Granular’s sound business plan and attractive market opportunity positions the company to improve results over the longer term.
