Petplan aims to double policies under Warburg as pet insurance market heats up, CEO says
Petplan, the Newtown Square, Pennsylvania-based pet health insurance provider, will look to further penetrate the underserved North American market under its new PE owner and executive leader, said CEO Paul Guyardo.
On 2 October, Warburg Pincus announced its 100% acquisition of Petplan for undisclosed terms. The company now aims to double the number of its policyholders to more than 400,000 within three to five years, said Guyardo, who officially became CEO in January after consulting for the company since June 2018.
Guyardo declined to comment on financials, only noting Petplan is profitable. A source familiar with the business said Petplan currently has around USD 125m-USD 135m in net written premium and generates roughly USD 40m in revenue.
There is plenty of room in the nascent market for all players to scale, so Petplan is primarily focused on organic growth, according to Guyardo, The US and Canadian markets are hugely underpenetrated, with 67% of US households owning a pet but only 2% of those pets insured, he noted. In contrast, roughly 25%-30% of pets are insured in Europe.
The North American market, however, is now growing by approximately 15%-20% annually, driven in part by the “humanization of pets” and rising cost of pet healthcare, Guyardo said. The trend has reignited M&A in the space, with Synchrony [NYSE:SYF] acquiring Pets Best in March, followed one month later by NSM Insurance Group’s purchase of Embrace Pet Insurance. Terms of both deals were undisclosed.
The few remaining independent companies left in the burgeoning space include PetFirst, Pets Plus Us and FIGO. According to the North American Pet Health Insurance Association, Petplan is the fourth largest player, behind Nationwide-owned [NYSE:NFS] Veterinary Pet Insurance, Trupanion [NASDAQ:TRUP] and AON-owned [NYSE:AON] Healthy Paws. The four companies together hold a dominant share of the market, according to Guyardo.
Other US and Canadian pet insurers include Crum & Forster Pet Insurance Group, owned by Fairfax Financial [OTCMKTS:FRFHF]; Petline Insurance, owned by Economical Mutual Insurance; and Pethealth [TSE:PTZ].
In the past year, Petplan subscriptions have grown by nearly 15%, after roughly three years of sluggish sales, Guyardo said. The stagnated business was resuscitated via a focus on digitization combined with an upsurge in market demand, particularly around March of this year, the CEO noted. Moreover, Guyardo is taking a cue from his own background of growing or turning around subscription-based businesses.
Prior to Petplan, Guyardo was a board member of Nutrisystem for seven years until the company was sold to Tivity Health earlier this year. He also previously was chief commercial officer of Discovery Inc. and executive vice president of DIRECTV and HSN.
Petplan, which focuses primarily on dogs and cats, will also grow by launching new products, according to Guyardo. The company is considering new policies for routine services, as well as pared-down policies that only include essentials such as medical and dental. Petplan’s current policy covers unexpected accidents, injuries and illnesses and offers comprehensive services including holistic care, alternative therapies and behavioral health treatment, he explained.
Founded in 2003, Petplan has more than 200 employees. The company has an exclusive North American licensing agreement with its UK-based, Allianz-owned counterpart of the same name.
Law firm Cozen O'Connor advised Petplan on its sale to Warburg. Law firm Wachtell, Lipton, Rosen & Katz advised Warburg. BDO provides accounting services to Petplan.