The LeapFrog team consists of top-tier executives, investors, and insurance experts who have built and run large-scale organizations – and have decades of combined investment and operational experience. LeapFrog is also driven by a broader community of global investors, eminent advisory board members, partner firms, and influential supporters such as President Clinton.

A LeapFrog investment is a patient equity investment, to enable management teams to undertake a new journey of growth, profitability and impact. We do not seek to replace management; rather, the LeapFrog team brings a new level of capital and expertise to help them succeed with their greatest ambitions.  Globally, LeapFrog is the largest fund and preeminent team focused on the investment and operations of insurance businesses serving low-income and vulnerable people – in short, the best partner an expansion-ready company could have.

The team and its partner firms are able to support investee businesses across all insurance types and across all parts of the value-chain. For instance, we can help broker partnerships with alternative distribution channels, introduce state-of-the-art products or technology to promote better-priced products and lower-cost processes, and help develop first-class risk management systems to control loss ratios and expenses.

According to Lloyds, there are over 1.5 billion low-income people who are willing and able to pay for, but do not generally have access to, insurance. In fact, the 135 million people currently covered are less than 10% of the potential market – a market in which insurance lines to low-income people are typically growing at double-digit rates annually. LeapFrog is the first investment fund globally dedicated to this opportunity. Swiss Re estimates the microinsurance market to be a $40 billion opportunity, and severely underpenetrated – leaving hundreds of millions of people without essential safety and security for their families and businesses.

Apollo Investments Limited is an East African multi-line insurance group based out of Kenya. LeapFrog made a nearly $14 million commitment to the company and has helped position the company as a regional leader in Africa. AllLife is an innovative South African insurer, serves people living with HIV and diabetes. LeapFrog made a nearly $7 million investment in the company and has helped change its growth curve.

LeapFrog’s investee companies provide high-value life as well as general insurance products. The key drivers are strong client demand, excellent product design and distribution, low transaction costs, and ultimately the value and simplicity that the product offers to low-income people. Portfolio companies can also offer diverse types of life cover, as well as health, property, accident, weather, endowment and other types of insurance cover – all tailored to the relevant market and communities served.

A LeapFrog investment brings patient capital to the company with a typical time horizon for an investment of 4 to 7 years.  Investments are typically minority investments, supporting the existing management team’s growth plans.  LeapFrog partners typically take one or more seats on the company’s board of directors, supporting strategic management and governance through a range of value-adding activities, mergers and acquisitions and ultimately value creation and exit for the mature high-growth business, for example through an IPO, MBO or trade sale. 

LeapFrog considers four kinds of investments.

• Investments in growth-stage microinsurance businesses that are poised to scale in client numbers, impact, and profit. LeapFrog is able to support optimal growth as well as help the business move into new products and geographies. 

• Distribution driven investments where LeapFrog works with a large distributor — such as a microfinance institution, retail chain, mobile phone network, church group or nonprofit — to capitalize a company that swiftly reaches a substantial and fast-growing client base. 
• Insurer driven investments where LeapFrog co-invests with or invests in an insurer, bringing capital and expertise that reduce risk, increase speed to market, and improve both profitability and impact as that insurer focuses on how to move down-market to tap the Base of the Pyramid opportunity. 
• Adjacencies and ecosystems: In addition to investing in or with microinsurers, distributors, risk carriers (insurers, reinsurers, cell captives), LeapFrog is also open to investing in third party administrators, IT providers, and adjacent essential financial services businesses such as pension providers.

We have a diversified investment strategy focused on high growth emerging markets where there is a large low-income population and demand is strong for essential financial services – while an array of distribution channels exist serving low-income and otherwise vulnerable people. In almost every such country, there is a developed commercial insurance industry but limited microinsurance coverage (although the market is growing rapidly). Our current focus countries are India, Indonesia, the Philippines, Kenya, Ghana, Nigeria, and South Africa – but we are open to looking at opportunities in Asia and Africa more broadly.

LeapFrog’s Advisory Board consists of senior executives from investment banking, private equity, insurance, microinsurance, social enterprise, and accounting and audit.  Our Board Members have a total of over 100 years’ investment experience and over 120 years’ experience building businesses.

By design, the return on LeapFrog’s investments is inextricably linked to portfolio companies’ ability to effectively meet the insurance needs of millions of underserved people. LeapFrog supports investee companies to keep margins reasonable but volumes high, ensure that products are affordable and desirable and taken up in large numbers by low-income customers. By design, LeapFrog’s success in achieving strong financial returns must depend on its ability to drive scalable businesses that deliver relevant, quality and affordable products. We track the quality and value of products, and the sustainability and integrity of each company, using rigorous key metrics on which LeapFrog companies report quarterly. Instead of a trade-off, LeapFrog offers a new synergy between profit and purpose.

We seek to achieve risk adequate returns that allow LeapFrog to achieve both the targets typical of private equity firms, opening the gates of the capital markets, and simultaneously meet the needs of low-income insured populations, ending cycles of poverty. We don’t believe that this immense market of the future requires choosing between generating money and generating meaningful impact; we believe each can harness the other to powerful effect. Insuring the next billion is a commercially viable and socially impactful endeavor.

LeapFrog Labs is a sister organization of LeapFrog Investments, dedicated to driving financial services further down the economic pyramid. Labs uses grant funding to support technical advisory work, R&D, and market development in areas with high social returns that could not reasonably be served in an economically viable way by the LeapFrog fund or its investment companies, because of the risks involved and/or opportunity cost. Labs exemplifies the catalytic use of grant capital – to get companies and markets ready for investment, and support companies innovating for ever-higher impact on ever-larger numbers of poor and vulnerable people. 

Microinsurance is low-premium insurance designed to protect people and small businesses in developing countries from the financial effects of illness, death, property loss, weather or other risks. These adverse events significantly disrupt household income and consumption, prevent families and communities from building assets, and leave people permanently poorer or destitute.  For this reason, many low-income and poor people lie awake at night worrying their families are going to lose everything in one event beyond their control; they are profoundly willing – and often able – to pay for low-premium products that mitigate such grave risks. Among other advantages, insurance of various kinds can also be bundled with other products and services, making it an attractive adjacency for distributors and financial firms with wide reach. Yet over 90% of people in the world’s 100 poorest countries do not yet have access to insurance – even though over 1.5 billion of them are able to pay for this critical security.

Affordability depends heavily on the region and the product, but microinsurance policies can be purchased for example for $3 to $7 a month for a life policy with a basic coverage (some products are lower than $1 a month, some over $10). Even for someone earning $3 to $5 a day, or $90 to $150 a month, this can represent a worthwhile expenditure of 2 to 5% of their income. The real value is the safety and security that these products afford for people lying awake at night, worrying that everything will be wiped out. While wealthier people often have a financial cushion, the poor often do not; the fear of sudden and severe loss often makes them willing to pay for insurance, even if that involves foregoing some other quite basic purchases.

Most kinds of products found in conventional insurance also exist in microinsurance, including cover for assets such as farming equipment, vehicles, houses, store inventory as well as health and life cover. However, there are far too few of all these essential products today, leaving hundreds of millions of people vulnerable. According to the 100 Country Landscape Study conducted by members of the LeapFrog team and the Microinsurance Center, multiple country studies, and studies by Lloyds and Swiss Re, demand for microinsurance products is strongest for life and health coverage. Traditional commercial insurers tend to focus on life insurance. NGO insurers provide small amounts of health insurance, but nothing exists at the scale required. The reality is that all types of insurance – such as high-value life, property, health, and accidental death & disability – are in dire short supply given the vast demand estimates.

A recent study conducted by Michael McCord from the Microinsurance Centre identified 15 million people, or about 2.6% of the population living under USD 2 per day, in 32 countries covered by microinsurance products in Africa. South Africa alone is responsible for over half of microinsurance in the region with 8 million policies. In Asia, insurance to low-income populations is dominated by India and China.  Still, more than 90 percent of low-income people in the Asia region do not have any such protection. The reach of insurance, and the opportunity to serve these vulnerable people, differs markedly in diverse countries. 

The regulatory environment differs significantly from country to country.  In many cases, emerging market countries do not have as developed a regulatory environment as developed countries. International development agencies such as the World Bank, GTZ, and others are actively working to create microinsurance specific regulations which support the low income market by reducing the sometimes onerous requirements of full regulatory supervision – while ensuring that client protection remains at the forefront. These developments are on the whole positive, and if anything, will improve the industry’s prospects. A good recent example is the raft of enabling regulations issued in the Philippines to promote the industry in a country of 96 million people, most of whom do not have insurance.

Insurance both protects and enables different daily choices for individuals, families, and communities. It is also a highly scalable financial service and one that is commercially viable, and thus can attract significant domestic and international capital – enough to reach hundreds of millions of people and make a massive and measurable dent on poverty. Importantly, commercial insurance is not a hand-out but a service provided to a customer – once people have access to insurance, they have a safety net and springboard to empower them lift themselves out of poverty. 

With insurance markets in the developed world largely saturated, insurers are turning their attention to the developing world. The opportunity in the developing is very large and most insurers in low-income countries have been occupied with doing what they know well, which is trying to develop the more traditional middle and upper income insurance markets. It takes both capital and distinctive expertise in product design, pricing, distribution, client education, and much else besides, to successfully provide microinsurance, profitably and at scale. That capital and expertise is not yet widely available – though LeapFrog, with its investors and partners, has begun to change that equation.