Answer Financial Inc. Secures $35 Million in Additional Capital for Rapid Growth

Strategic Insights -

Answer Financial Inc., a leading online marketplace for insurance and financial services, has attracted $35 million in additional capital to fuel its rapid growth. This investment will enable the company to further accelerate its growth and add eight new product lines within the next 12 months. The new capital was secured from Conning & Company's Private Equity Group, the lead investor, and TeleBanc Financial Corp., a leading online bank.

The company's unique offering, the Insurance Answer Center (IAC), provides full insurance services, including comparative quoting, policy sales, and post-sales customer service, to employees of large companies and affinity groups. AFI's existing investors include Elliott Associates, prominent individuals, and AFI's management team, which also have strategic alliances with Hewlett-Packard and Sapient Corp.

AFI's relationship with Conning and TeleBanc is a continuation of its core strategy of crafting synergistic alliances. The company's CEO, Alan Snyder, noted that AFI selected investors who offered intellectual and strategic capital in addition to funds. Analyst Gary Craft of BancBoston Robertson Stephens describes AFI's investment appeal as a "strong value proposition to employers," which could generate Microsoft-type margins of 40-50% or more.

Key Takeaways:

  • AFI secured $35 million in additional capital to fuel its rapid growth.
  • The new investment will enable the company to add eight new product lines within the next 12 months.
  • AFI's unique offering, the Insurance Answer Center (IAC), provides full insurance services to employees of large companies and affinity groups.
  • AFI has strategic alliances with Hewlett-Packard and Sapient Corp.
  • The company's CEO, Alan Snyder, noted that AFI selected investors who offered intellectual and strategic capital in addition to funds.
  • Analyst Gary Craft of BancBoston Robertson Stephens describes AFI's investment appeal as a "strong value proposition to employers."
  • The IAC provides employers with an exclusive right to market voluntary benefits on the employee's desktop.
  • AFI's investment appeal lies in its ability to generate Microsoft-type margins of 40-50% or more.

Statistics:

  • $35 million: The amount of additional capital secured by AFI.
  • 8: The number of new product lines that AFI plans to add within the next 12 months.
  • 67: The number of leading insurance companies that provide products through AFI.
  • 40-50%: The projected margin of profit for AFI's business model, as described by analyst Gary Craft.
  • $435 million: The amount of private equity capital managed by Conning's Private Equity Group.
  • $370 billion: The amount of assets under management by Bankers Trust Corp.
  • $133 billion: The assets of Bankers Trust Corp.
  • $2.3 trillion: The global assets under custody of Bankers Trust's securities-processing services.

Sources:

  • Business Wire, April 26, 1999.
  • Conning & Company, www.conning.com.
  • TeleBanc Financial Corp., Nasdaq: TBFC.
  • BT Capital Partners, private equity arm of Bankers Trust Corp.
  • BancBoston Robertson Stephens, research report on the Internet.
  • Answer Financial Inc., www.answercenter.com.
  • Alan Snyder, CEO of Answer Financial Inc.
  • Gary Craft, analyst at BancBoston Robertson Stephens.