HCI Group subsidiary will use Centerbridge Partners’ funds to expand nationally.
TAMPA — TypTap Insurance Group Inc. has announced that a New York-based investment firm has injected $100 million, or roughly 11.75% of its value, into the homeowners and flood insurer.
The Tampa-based HCI Group Inc. subsidiary intends to use the allocation from Centerbridge Partners L.P. to execute a national expansion of its offerings and to enhance its technology, according to a statement. The Centerbridge investment implies a valuation for TypTap of roughly $850 million.
“This capital infusion will enable TypTap to pursue its national expansion plans rapidly and to continue developing innovative insurance-related technologies,” says Paresh Patel, HCI and TypTap’s CEO, in the statement. "We will immediately begin preparing TypTap for future growth. Centerbridge will be a valuable partner in all our efforts and we look forward to working with them.”
In exchange for the capital infusion, Centerbridge has received preferred shares with dividend, redemption, liquidation and other rights and obtained the right to acquire from HCI a four-year warrant to buy 750,000 common shares at $54.40 per share.
Upon the completion of an initial public offering, the preferred shares would automatically convert to common shares if certain parameters are met.
The investment also allows Centerbridge the right to appoint a director to both the HCI and TypTap boards of directors.
“We have been enthusiastically observing TypTap’s growth trajectory and progress over the last couple of years and are particularly impressed by what the leadership team has been able to accomplish with respect to profitably scaling its InsurTech platform,” says Eric Hoffman, a Centerbridge managing director.Centerbridge was founded in 2005 and today has roughly $28 billion in capital under management.
Since its founding in 2016, TypTap has grown rapidly using an “innovative, proprietary, online platform to quote and bind policies quickly and efficiently.” The company also has used algorithms enabled by artificial intelligence to identify policies that deliver profitable results while mitigating risk. Although it operates primarily in Florida currently, the company has received regulatory approval from 10 additional states and approvals to operate are pending in an additional nine states.
In conjunction with the investment, HCI plans to file Forms 8-K with the U.S. Securities and Exchange Commission to provide additional information regarding the Centerbridge transaction.It also has included a supplemental presentation regarding the investment on HCI’s website.
J.P. Morgan Chase & Co. acted as sole placement agent on the transaction. Foley & Lardner LLP advised HCI and Kirkland & Ellis LLP advised Centerbridge.