Deutsche Bank and UniCredit back $4.5 billion insurance startup Wefox with $55 million in new funds

Wefox, the $4.5 billion German insurance technology group, has raised $55 million in new funding German Bank And UniCredittwo anonymous sources familiar with the deal told CNBC.

The company, which sells insurance plans through an online platform, raised the fresh money in a debt financing deal from the two European lenders, which were not authorized to make the information public, according to the sources.

The deal was structured as a convertible debt agreement, meaning the debt will convert to equity the next time Wefox raises cash, the sources told CNBC.

The new funding follows a $55 million debt round from which Wefox raised JPMorgan And Barclays and a $55 million internal fundraising earlier this year.

Because Wefox did not raise any equity, its valuation remains unchanged at $4.5 billion.

It brings the total funding raised by Wefox so far this year to $160 million and marks a vote of confidence at a time when the insurtech industry faces a grim macroeconomic environment.

The money will be used to help eight-year-old Wefox accelerate its global expansion plans and double the number of mergers and acquisitions, according to the sources.

Unlike other insurtech platforms such as Lemonade in the US or Getsafe in Germany, which offer insurance directly to consumers without the involvement of brokers, Wefox works with a network of brokers, both internal and external, who distribute its insurance products.

Wefox is also pushing for a new model for selling insurance called “affinity distribution.” Here the company sells its insurance software to other companies for a subscription fee, for example an online car dealer that adds car insurance at the point of sale.

Wefox is backed by some of the best-known names in venture capital, as well as major institutional names in traditional finance.

The VC backers include Salesforce Ventures, Target Global, Seedcamp, Speedinvest and Horizon Ventures, while UBS, Goldman SachsMubadala Capital Ventures and Jupiter Asset Management are also existing investors.

Wefox is also investing heavily in artificial intelligence, which has become a hot technology area recently following the rise of the viral AI chatbot ChatGPT.

Wefox mainly uses AI to automate policy applications and customer service. The company has three technology hubs in Paris, Barcelona and Milan dedicated to AI.