Risk management refers to “the process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions.” (investopedia) in finance, whereas, in insurance, it is significant for setting the right price of a service that an insurance underwriter provides. Our startup spotlight guest this week is Vesttoo from Israel which has developed advanced technologies for data-driven risk management, translating actuarial risk to financial risk through the capital markets. Vesttoo specializes in risk modeling and alternative risk transfer for the longevity and P&C markets, providing insurers with a low-cost strategic risk management solution for immediate capital relief and liability hedging. Head of Marketing Liran Grunhaus told us about their pathway.
Tell us about your team.
Our management team has a diversified professional experience in global business development, investments, technology/systems/algorithms, financial engineering, credit rating, and management Additional team members include: data scientists, financial engineers, actuaries, product managers, program managers, and marketing communication managers
When and why did you found your startup?
Vesttoo is a revolutionary hedging and reinsurance platform based in Tel Aviv, Israel, which was founded in 2018 by Alon Lifshitz, Yaniv Bertele, and Ben Zickel. They sought to find a strategic solution for the lack of comprehensive reinsurance and risk transfer in the insurance markets. Today, Vesttoo’s goal is to utilize advanced technologies to provide insurers and pension providers with data-driven risk management, using the capital markets to hedge liabilities and transfer risk.
What are your key and unique features?
The company provides insurers and pension funds with affordable, strategic risk transfer to the capital markets, while investors benefit from uncorrelated, high-yield investments with remote loss possibilities. As a one-stop-shop solution provider, Vesttoo handles every aspect of the deal using its cutting-edge proprietary AI and machine learning stochastic algorithms, creating highly accurate risk models and forecasts. Vesttoo’s advanced risk-modeling technology transforms the way securities are structured, offered, and traded, providing an accessible, flexible, scalable, and affordable streamlined alternative to traditional reinsurance.
Tell us about the numbers that matter to you.
The Longevity Risk that life insurers and pension funds are exposed to is evaluated at over $80 trillion worldwide. This exposure is currently rising at a rate of 3–5%, while longevity reinsurance penetration is still under 1%. Furthermore, for each additional year of unanticipated life expectancy at age 65, pension liabilities grow by 4–5%. A similar funding gap can be seen in other Insurance arenas and risk types - Mortality Risk, Lapse Risk, Motor Liabilities, General Insurance Liabilities, and more. Vesttoo helps insurers bridge that financing gap while providing investors with attractive risk/reward investments with remote loss possibilities.
What are your plans for next year and for the next 5 years?
Vesttoo's vision is to create a world where insurance and alternative capital are fused and globally accessible. In the next year, in addition to scaling our deal pipeline, we are going to launch a fund dedicated to insurance risks and insurance-linked assets. Towards the end of next year, we will be launching a full-scale Insurance-linked-securities marketplace, and within the next 5 years, we expect to be a global hub for ILS.
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