Insurer Wefox's board sounds fresh alarm over possible collapse
4 September 2024, 15:40 | Updated: 4 September 2024, 17:28
The board of Wefox, the troubled European insurance company, has sounded a fresh alarm over its solvency, warning investors that it could collapse before the end of the year without an additional funding boost.
Sky News has learnt that investors in Wefox, which is backed by a syndicate of prominent investors including the Abu Dhabi state fund Mubadala, Target Global and London-listed Chrysalis, were notified by its directors in recent days that a further deterioration in trading had left it requiring bridge funding of at least €15m (£12.6m) by the end of November.
In an update to shareholders, the company, which is run by the British insurance executive Mark Hartigan, said its latest set of accounts, to be filed in October, would include a 'material uncertainty' warning about its future solvency.
If its current financial projections materialised, Wefox said, its holding company "will run out of cash in December and become insolvent immediately thereafter".
The update comes weeks after Wefox bought itself time by raising roughly €20m (£16.8m) from existing investors, while it has also sold Assona, a subsidiary which offers insurance cover for electric bikes.
Read more:
Insurance unicorn Wefox warns investors of insolvency risk
It is now engaged in a disposal process, run by Rothschild, for its Dutch business, which could fetch hundreds of millions of euros, according to insiders.
Wefox's core shareholders also remain supportive of the company's turnaround plan, they added, meaning that the risk of insolvency was in fact significantly lower than that suggested by its board of directors.
One source said a new chief executive to replace Mr Hartigan was close to being appointed, and that a new investor was expected to emerge in the wake of that.
"Significant milestones were achieved during the summer, including the completion of two transactions to exit the German market and a significant reduction in the cost base," a Wefox spokesman said.
"As communicated earlier, work is underway on a new strategy to ultimately position wefox in the medium term as a leading, technology-enabled insurance distribution company, and additional capital measures are under evaluation by the investors to support a new strategic and financial framework within a revised governance structure."
Wefox has been ravaged by losses in a number of its key markets including Italy, although its operations in the Netherlands remain profitable.
The company was valued at $4.5bn (£3.6bn) in a funding round less than two years ago and counts Barclays and JP Morgan among its lenders.
Founded in 2015, Wefox sells insurance products through in-house and external insurance brokers, and has frequently boasted of its ambition of revolutionising the insurance industry through the use of technology.
It has more than two million customers across its business.
In July 2022, Wefox raised a $400m Series D funding round valuing it at $4.5bn, making it one of the largest fintechs in Europe.
That followed a $650m round in May 2021 valuing it at $3bn, reflecting the frothy appetite of investors to back scale-ups regarded as having the potential to become global competitors of genuine scale.
It then secured a further $55m in equity financing and the same amount in debt funding from Barclays and JP Morgan a year ago.
Wefox declined to comment on the details included in its update to shareholders.
(c) Sky News 2024: Insurer Wefox's board sounds fresh alarm over possible collapse
