The board of Wefox, the troubled European insurance company, has sounded a fresh alarm over its solvency, warning investors that it could collapse before the end of the year without an additional funding boost.

Sky News has learnt that investors in Wefox, which is backed by a syndicate of prominent investors including the Abu Dhabi state fund Mubadala, Target Global and London-listed Chrysalis, were notified by its directors in recent days that a further deterioration in trading had left it requiring bridge funding of at least €15m by the end of November.

In an update to shareholders, the company, which is run by the British insurance executive Mark Hartigan, said its latest set of accounts, to be filed in October, would include a ‘material uncertainty’ warning about its future solvency.

If its current financial projections materialised, Wefox said, its holding company “will run out of cash in December and become insolvent immediately thereafter”.

The update comes weeks after Wefox bought itself time by raising roughly €20m from existing investors, while it has also sold Assona, a subsidiary which offers insurance cover for electric bikes.

Read more:
Insurance unicorn Wefox warns investors of insolvency risk

It is now engaged in a disposal process, run by Rothschild, for its Dutch business, which could fetch hundreds of millions of euros, according to insiders.

Grenfell Tower: Landmark report finds government ignored warnings about fire risks of high-rise buildings

Sixth Street lays foundations to rival Persimmon in race for Cala

Nvidia-led slump hits global stock markets

Wefox’s core shareholders also remain supportive of the company’s turnaround plan, they added, meaning that the risk of insolvency was in fact significantly lower than that suggested by its board of directors.

One source said a new chief executive to replace Mr Hartigan was close to being appointed, and that a new investor was expected to emerge in the wake of that.

“Significant milestones were achieved during the summer, including the completion of two transactions to exit the German market and a significant reduction in the cost base,” a Wefox spokesman said.

“As communicated earlier, work is underway on a new strategy to ultimately position wefox in the medium term as a leading, technology-enabled insurance distribution company, and additional capital measures are under evaluation by the investors to support a new strategic and financial framework within a revised governance structure.”

Wefox has been ravaged by losses in a number of its key markets including Italy, although its operations in the Netherlands remain profitable.

Keep up with the latest news from the UK and around the world by following Sky News

The company was valued at $4.5bn (£3.6bn) in a funding round less than two years ago and counts Barclays and JP Morgan among its lenders.

Founded in 2015, Wefox sells insurance products through in-house and external insurance brokers, and has frequently boasted of its ambition of revolutionising the insurance industry through the use of technology.

It has more than 2m customers across its business.

In July 2022, Wefox raised a $400m Series D funding round valuing it at $4.5bn, making it one of the largest fintechs in Europe.

Be the first to get Breaking News

Install the Sky News app for free

That followed a $650m round in May 2021 valuing it at $3bn, reflecting the frothy appetite of investors to back scale-ups regarded as having the potential to become global competitors of genuine scale.

It then secured a further $55m in equity financing and the same amount in debt funding from Barclays and JP Morgan a year ago.

Wefox declined to comment on the details included in its update to shareholders.

Related posts:

LSEG braces for shareholder backlash as advisor urges pay revolt Poundland owner Pepco snubs London with £4bn Polish float Two of America’s most famous investors go head-to-head Heathrow passenger numbers improving but still below pre-pandemic levels UK’s new top taxpayer named as little-known billionaire born in Russia Migration, Energy and AI in the workplace. Millions risk getting ill because they are ‘too scared to put heating on’ Private rental costs march higher across Britain while house price growth declines Moulton opens window to sale of double-glazing supplier Everest Octopus Energy tech arm to name CEO as valuation soars Profits up at Mirror and Express publisher after ‘substantial’ job cuts Altnet Zzoomm accelerates hunt for merger partners