Insurance unicorn Wefox has issued a warning to investors about a potential insolvency due to ongoing financial losses and regulatory challenges.
In a memo to shareholders from CEO Mark Hartigan, sent in early May, he indicated that the company might face insolvency as early as August this year. According to Sky News, Hartigan stated, “The opportunity to rebuild through restructuring and any optionality for the future remains dependent upon reaching a sustainable position by balancing cashflows with the timing of our planned disposals.”
He expressed concern about the strain on group finances stemming from various pressures, including regulatory requirements for upfront capital, business disruptions caused by increased media scrutiny leading to partner uncertainty, and rising costs associated with a Revolving Credit Facility. Hartigan noted that these factors could disrupt the necessary balance for the company’s sustainability.
The situation is further complicated by recent job cuts and the closure of Wefox’s offices in Italy, Germany, Poland, and Switzerland. The company was valued at £3.6 billion less than two years ago, with support from lenders like Barclays and JP Morgan. Since its founding in 2015, Wefox has grown to serve 3 million customers worldwide.
In 2023, Wefox managed to secure £55 million in funding but is now focusing on reducing costs by closing international offices while trying to maintain its business model.