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Take predictions and urban legends with skepticism: Luko is not France’s next unicorn, and Paul McCartney is not dead. Now rumor has it that insurtech M&A is off the table. As for me, I’ll be listening to the Beatles. — Anna
Questions on a “huge achievement”
Over the summer, we learned that French insurtech Luko had avoided what seemed like imminent insolvency by agreeing to be acquired by British insurer Admiral Group. It wasn’t the journey its investors had envisioned when they put a reported €72 million into the startup, but it wasn’t the end of the road.
However, rumors emerged a few days ago that Admiral was giving up on buying Luko.
We won’t know Luko’s fate for sure until at least November 7, its next judicial deadline. But according to L’Argus de l’Assurance, the insurance-focused media outlet that got the scoop, the restructuring of the startup’s €45 million debt became a blocking point, with creditors BNP Paribas and Triple Point Ventures both hoping to get their money back before one another.
It isn’t just creditors who may end up losing; there are some 180 jobs on the line, too. And while Luko could still sell itself, it seems less likely to receive a “very competitive offer” like the one Philippe Maso y Guell Rivet said his company Ornikar made to Luko earlier this year.
French financial newspaper Les Echos reported a few days ago that potential buyers included Ornikar, insurtech Leocare and insurance incumbents AXA and Allianz. The latter is getting ready to launch a DTC insurtech platform in France called Allianz Direct, which confirms that some are still bullish about this business model.
Luko declined to comment.
While insurance industry observers argued that macroeconomic conditions weren’t the only culprit of Luko’s demise, there was also some consensus that a takeover by Admiral Group made sense.
“I think it’s a much better continuation than if any traditional French insurer had got their hands on Luko. In addition, Admiral is also present in France via L’Olivier but mainly does car insurance. So I think they complement each other,” insurtech consultant and adviser Bertrand Robert told me at the time.
That the two companies were a good match was also my impression after talking to Luko CEO Raphaël Vullierme and L’Olivier CEO Pascal Gonzalvez over the summer. I still had doubts about calling it a “huge achievement,” though.
The way Luko communicated about the deal certainly left many perplexed, to say the least. If it doesn’t happen, the memory of its recent ad campaign will add salt to the wound. In September — that is, after the acquisition announcement — billboards in the Paris metro showed a wounded unicorn while touting Luko’s qualities as an insurer.
The message may have been confusing to customers, but not to startup insiders: It was clearly an attempt to joke about Luko’s former-future-unicorn status; it won the Grand Prize at VivaTech’s Next Unicorn Awards ceremony in 2022.
In a LinkedIn survey, some praised the messaging for its sassiness. But more judged it inappropriate, and Luko’s employees may soon join their ranks if they end up losing their jobs.
Indeed, the non-unicorn is now at risk of being sold for parts. To some extent, it is already happening, as Admiral Group declined to take over some activities, such as the unpaid rent insurance category Luko had ventured into with the acquisition of Unkle.
In October, insurance players Solly Azar and Sada Assurances announced that they were partnering to take over Luko’s unpaid rent insurance portfolio. I reached out to check whether the deal was final, but didn’t hear back. The matter may be complicated by the fact that Matthieu Luneau, Unkle’s former CEO, reportedly launched several lawsuits against Luko.
As for Luko’s German portfolio, mostly owing to its previous acquisition of local startup Coya, it has already gone to Getsafe, fast-tracking the European digital insurtech’s growth to 550,000 customers.
In an email, Christian Wiens told me that Admiral’s decision won’t have any bearing on the agreement. “Our deal was executed in the last few weeks, and the whole customer base has already been transferred to our balance sheet,” Wiens wrote.
While it is too late for buyers’ remorse, some insurance players may now be inclined to wait for Luko to touch rock bottom before making an offer, especially if they are not interested in hiring any of its former staffers. If only for the sake of these employees, one may hope that Admiral goes ahead with the deal or that Luko finds another buyer.
One thing is for sure, the price tag won’t be anywhere near the $435 million that publicly traded insurer Travelers agreed to pay for Boston-based insurance company Corvus. As insurtech content expert Alexandre Pengloan noted on LinkedIn, that would be more than 30 times the amount of Luko’s “non-acquisition” by Admiral Group.
“Now and then”
My colleague Devin Coldewey wrote a great article on the Beatles’ last tune and how advancing audio isolation technologies made it possible. My take is more visceral: I find it incredibly touching, and I am glad it exists.
Don’t be afraid of the ‘AI-assisted’ Beatles song, ‘Now And Then’
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