SVB had a major presence in both California and Massachusetts
While the collapse of Silicon Valley Bank may not have a major consequence with respect to traditional insurers in the Massachusetts insurance industry, the insurtech community could likely feel aftershocks from its implosion over the weekend. According to the Boston Business Journal and Bostinno, SVB Bank is the 10th largest bank in Massachusetts based on deposits, with the FDIC stating that the bank had 17 branches in both California and Massachusetts. As of December 31, 2022, the institution had approximately $209.0 billion in total assets and about $175.4 billion in total deposits.
As for the fintech and insurtech space, SVB boasts on its website that 72% of the Forbes Fintech 50 banked with SVB, while 70% of US Companies on CB Insights’ Fintech 250 partnered with SVB.
In addition to its operating size, the bank also had an outsized role as a leading mentor to the start-up community in the Greater Boston Area. According to Bostoninno, the company’s Boston office had a popular events space and was very active in the community, reaching out to new founders during events such as Boston Fintech Week.
Governor Healey comments on SVB
In response to this unexpected event, both Governor Healey issued the following statement on SVB’s demise:
“We have been closely monitoring the situation with Silicon Valley Bank. I have spoken with federal regulators and the White House, and they understand the impact of the situation on Massachusetts. I have also spoken with members of the business and banking communities and our state and federal delegation. Our administration is actively working to support individuals and businesses affected by SVB’s closure and to find solutions to help them address immediate needs, including putting supports in place to ensure that small businesses and employees do not experience significant disruptions. We will continue to be in dialogue with decision-makers and support all efforts to preserve the strength and stability of our markets and protect jobs, businesses, non-profits and our economy. We have confidence in the strength of our regional banks and banking operations.”
In the same press release, Economic Development Secretary Yvonne Hao added these additional comments:
“My office has been working throughout the weekend to gather data on the impact of Silicon Valley Bank’s closure here in Massachusetts and to assess how sectors of our economy may be affected in the days ahead. We know Massachusetts may be uniquely impacted by this situation due to our strong technology, innovation, and life sciences sectors and because SVB had a broad client base here, including nonprofits, individuals and others. We are confident in the FDIC’s process in resolving bank closures and in the Massachusetts banking sector. The Healey-Driscoll Administration is working across secretariats to develop creative solutions to help businesses and individuals meet their needs and fill gaps where necessary.”
Lemonade Issues Statement while Pie stays silent
Online insurer, Lemonade, was one of the first insurtechs to issue a statement on the failure of SVB and its impact on the company’s own operations. The following is reprinted from its 8K filing submitted on March 10, 2023:
Lemonade, Inc. (“Lemonade”) is aware of media reports indicating liquidity concern at Silicon Valley Bank (“SVB”). Lemonade considers its exposure to any
liquidity concern at SVB as immaterial given that it currently has less than $7,000 in cash at SVB, which is significantly below the FDIC-insured limit of
$250,000. We believe our cash and assets are well diversified to minimize risk, and Lemonade uses large financial institutions for its commercial banking
services that are not currently exposed to liquidity risk.
In comparison, Pie Insurance, another national insurtech featured prominently on the SVB website has yet to make a comment.
