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Wefox rescued from insolvency amid "profound" restructuring

Wefox rescued from insolvency amid "profound" restructuring

One-time insurance unicorn wefox has secured €25 million in fresh capital amid a brutal restructuring effort to keep the ailing business afloat.

Over the past 18 months, wefox has undertaken a rigorous process to streamline its operations, focusing on shedding non-core assets and enhancing its core strengths. In May it warned investors that it may soon face insolvency due to financial losses and regulatory charges.

The company was valued at £3.6 billion less than two year ago, with lenders including Barclays and JP Morgan, but has since been descending into crisis.

The prospect of insolvency was raised amongst job cuts amongst the Wefox ranks and shutdowns of their offices in Italy, Germany, Poland, and Switzerland.

The ongoing restructuring initiatives and asset sales have been making headway with the bulk of the execution expected to be completed by year-end.

Going forward, wefox says it will only focus on markets where it has profitable operations of critical size or is on track to achieving this within the next 12 months. In this context, the company will further build out its market positions in the Netherlands, Austria and Switzerland, and will withdraw from the German market.

Italy remains a core position in wefox’ business portfolio and will undergo a transformation to improve its profitability.

Additionally, technology development efforts will center on empowering local distribution platforms. Consequently, wefox is closing down its technology hubs in Spain and France.

The new focus also means that the insurance carrier, wefox Insurance AG, will no longer be part of the company's core business. In addition, wefox Insurance AG is actively seeking the disposal of selected portfolios that are not in line with its future risk appetite, starting with the sale of the Polish portfolio.

The shift in direction means that a number of the wefox executive and senior leadership team members, including Group CFO Jon Wismer, will leave the company in the coming months.

Mark Hartigan, executive chairman, comments: "The restructuring of wefox has been profound but necessary. With strong and committed investor support, we look forward to the next phase. We are determined to create value for business partners, customers and investors, retain and attract talented people and continue to drive innovation in local insurance markets.”

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