Supercede: Why We Invested
1. Reinsurance is a large market with specific needs, lacking a broad solution
In the world of venture capital, the phrases blue ocean and white space are thrown around a lot. Rarely does one find an industry as deserving of those words as reinsurance.
The reinsurance market is massive: €400 billion in premiums sold in 2022, a number that has grown from €245 billion in 2017. To-date, no company – start-up or incumbent – has managed to build a broad software solution for the industry’s very specific needs. We believe that Supercede is poised to fill this gap.
2. Increasing pricing pressure on cedents
Reinsurance prices have sky-rocketed in recent years.
Fig 1. Pricing index for primary, reinsurance and retrocession markets
Part of this is cyclical (read: inflation), but the largest driver is secular and long-term: climate change causing greater insured losses.
Fig 2. Global insured losses from extreme weather ($bn)
Consequently, insurers are facing growing pressure to manage their reinsurance costs and operate more efficiently. Enter Supercede.
By increasing reinsurance data quality, and standardising its presentation, Supercede gives reinsurers less reason to “load” – the practice of padding premiums 10% to make up for poor or missing data. By making the process of buying reinsurance several orders of magnitude easier, Supercede also makes ceding teams more efficient.
3. Strong industry founders, recognized as reinsurance thought leaders
As an Insurtech fund, we once undertook an internal McKinsey-style exercise to determine the biggest drivers of success among our portfolio companies.
As it turns out, the biggest single determinant is not a strong cap table, or strong founder education, or impressive growth (though Supercede has all of those), but rather: founders that come from the industry.
Despite its size (the 3rd largest industry in the world), insurance is an esoteric market with its own idiosyncrasies and vocabulary – reinsurance even more so. This is why in insurance, more than in most other verticals, having an industry background helps so much.
Jerad (CEO) and Ben (President) fit the bill as true (re)insurance insiders, having spent the entirety of their careers in the industry, in fact meeting while both working at Aon. In particular, Jerad was a reinsurance broker for the majority of his career.
As a result, they love the problem, they love the solution – and the industry recognises that: the list of attendees of their +100 episodes of “The Reinsurance Podcast” reads like a who’s who of reinsurance.
They are of and from the industry, so when customers speak to the Supercede team, they’re speaking to people who – almost uniquely – understand their world.
4. Pre-placement data management is a clear pain point
Supercede's "Packs" product, which compiles, cleans, and validates reinsurance data before it is placed, addresses a significant pain point for the industry. We spent several hours on customer calls, and quickly realised that this "wedge" product has already achieved product-market fit, with strong traction and high satisfaction rates – including amongst some of our own LPs.
Don’t take it from us, take it from the Head of Transformation at one of the world’s biggest insurers “Packs is a gamechanger”.
Fig 3. Selected “Packs” customers
5. "Packs" data product as starting point facilitates the creation of new products layered on top
As well as being much loved, “Packs’” very nature enables the creation of new, value-add products on top. It’s a data product, and when you start with a customer’s data, you can do a lot of other things with it (and no, we don’t mean sell it). Primarily, you can feed and integrate with other, new products, using the data from that first product – creating a much stronger value proposition for your customers.
For example, if Supercede wants to roll-out a policy admin tool to existing Packs customers, that tool will immediately have an advantage over incumbent competitors, because all the relevant policy information is already contained within Packs. It doesn’t have to be manually imported from myriad other systems.
The success of "Packs" provides a solid data foundation for the Supercede product line to build on, and we are already seeing this with “Deals”, a placement platform specifically designed for the complexity of reinsurance purchases.
Fig 3. Illustrative product roadmap
6. "Deals" and "packs" collaborative nature network effect
"Packs" and "Deals" are inherently collaborative products -- "Packs" is used by cedents and brokers to create reinsurance submissions together. “Deals” is used by cedents, brokers, and reinsurers to negotiate and close reinsurance deals.
There is a clear network effect at play here: the more cedents / brokers there are on the platform, the greater the access for reinsurers to good quality, well-organised submissions. The more reinsurers there are on the platform, the greater access to reinsurance capital that cedents / brokers have.
Fig 4. The Supercede flywheel
We’re already seeing this happen: 195 of 200 major reinsurers currently have 1+ unique active user on the “Deals” platform, and on the “Packs’” side, there has been a 214% increase in unique users from Q4 2022 to Q4 2023.
7. An industry standard
Supercede has a lot of things going for it: 5x year-on-year revenue growth, incredible brand recognition, good margins. The thing that excites us the most, however, is a bit more philosophical:
Supercede has the potential to introduce the de facto data standard for reinsurance.
The poor quality and inconsistency of data is the problem in reinsurance, and the industry is crying out for standardisation and regularisation.
Previous top-down attempts to introduce a standard have failed, and Supercede – built by reinsurance insiders – has the potential to become that de facto standard, by building products that practitioners want to use.
If they succeed—and we believe they will—Supercede will permanently improve one of the world’s oldest and largest industries.
For more information about our investment in Supercede please contact Faisal Al-Hussein, Principal, Mundi Ventures.
