The reinsurance industry isn't as it used to be. The space has traditionally been dominated by big players with names familiar to anyone who has ever acquired a copy of the Financial Times or the Wall Street Journal.
Even reinsurance hasn't been able to seize the opportunities that are changing the world economy, and online marketplaces have increased the model by making it more accessible to a wider array of institutional investors looking to diversify their portfolios.
Gaurav Wadha, a four-year-old FinTech executive, gave him clear marching orders when he joined Vesttoo this year as chief financial officer.
First, establish the appropriate infrastructure to ensure that the company will stand the test of time, one that expands as the company grows. Second, get the team in order, learn the business and understand the major strategic priorities for the whole business.
“The challenge is how do we create a company that is sustainable,” he said, “that is built to last, and that is primarily infrastructure.”
Getting the Infrastructure Right
Vesttoo is putting in place a robust data strategy that will be able to connect directly with its customer relationship management (CRM) platform to collect transaction data. This will be used to inform senior leadership about how to maximize growth by establishing the best resource and capital investment priorities.
In addition, he is leading efforts to create a new enterprise resource planning system and a new ledger system.
“As a young company, we had outsourced a number of these noncore functions, but we are now bringing them in-house so that as we grow, we have control over our own destiny.
“We are getting much more sophisticated equity investors. We want to make sure that they understand our growth, our financials, and our story as well as we understand it,” Wadha said.
Coaching the Team
He was fortunate to have a finance team that was already in place that was knowledgeable about the business itself. Now, he is developing the necessary skills within the team.
“My objective is that the team understands that we are not just reporting statistics, but we are also supporting the company in meeting its objectives.”
Vesttoo's core business is a B2B marketplace for reinsurance. It's a platform where insurance businesses that need capital and risk diversification can provide data about the risk they are writing that they wish to diversify. The platform then matches them with investors who are interested in non-correlated asset classes.
It has a risk engine based on artificial intelligence (AI) that allows institutional investors to better understand this risk, mimicking the sophistication of reinsurance companies.
Wadha explains that risk modeling is critical for these kinds of investments. He subsequently learned this lesson during the global financial crisis.
“I think investors are much smarter.”
According to him, the platform is getting a lot of attention:
"We've modeled $3.7 billion in risk with more than $1.2 billion in policies placed with investors in these reinsurance agreements — 60-70 deals that have already been priced."
The Strategic Role of the CFO
Wadha agrees with his List23 colleagues on the strategic role of the digital-first CFO.
"CFOs are today seen as not just reporting figures, but as a very strategic function, a large part of helping companies make better decisions, which requires access to data, very strong analytical abilities, tools, and mindset."