Allianz X’s De Kegel, Mundorf: Hard for insurtechs to pivot from growth to profitability

By James Thaler

June 24 - (The Insurer) - Underwriting-focused insurtechs should concentrate on profitability from the outset, Allianz X's Alexander De Kegel and Niklas Mundorf advised, pointing to the difficulty the founders of such firms have in pivoting from a growth mindset.

De Kegel, chief investment officer and North America managing director at Allianz X, and Mundorf, a manager at the German insurer's venture arm, made those comments to The Insurer TV at Insurtech Insights USA 2025.

“Number one above everything is underwriting,” De Kegel said of Allianz X's investment criteria, adding: "That was something that was a little bit lost and at one point it was growth, and if you have (gross written premium), it's great."

“The misconception … used to be that you can easily change underwriting on the back end. But the reality is, these things renew every year, and it's hard to drive rate into a book,” De Kegel said. He added that pushing rate increases too hard will lead customers to move carriers.

“And I think one of the huge things that we look for that is common across the portfolio we have is all the founders fully understand and they've always driven on loss ratios as the number one thing,” he said. "Unless loss ratio is good, then everything else doesn't matter – the loss ratio is the only thing. And I think if you're an insurance business, you live and die by what is your underwriting ratio, essentially. The rest you can work through.

“But if you don't have that, it's not going to work out,” said De Kegel.

Mundorf said Allianz X, whose portfolio has included Coalition, Lemonade, Pie and Next, focuses on unique products and usability.

“It's really about also creating a product that is easy to use, especially if we look at the SME segment, where policies sometimes are very, very small, and the agents don't want to spend hours on inputting data manually in order to come up to get to a price for a $500 policy. It's just not economic,” he said.

INVESTING IN BALANCE SHEETS

With more strategic investors striking deals for insurtech businesses, De Kegel said firms such as his have an advantage, given their greater familiarity with operating a risk-taking business.

“I think one of the underlying reasons for that is incumbents aren't scared of the balance sheet, whereas I think a lot of investors don't know how to work it,” he said.

“A lot of the value that exists within insurance (is) this concept of a premium on book value and things like that, (where) you (are) actually able to monetise the underwriting side of the equation, and not purely the MGA and the buildup of that,” he said

“It plays to the benefit of investors such as ourselves, to say, 'Great, we can actually work with the balance sheet, we can work with the underlying topical business and create a package out of that,'” De Kegel added.