Chief Executive Officer & Director, SELECTQUOTE INC
SelectQuote CEO Tim Danker on the company's IPO
Tim Danker, CEO of SelectQuote, joins "Squawk Alley" to discuss the company's IPO amid the coronavirus shutdown. For access ...
About Timothy Danker
Timothy Danker, CEO of SelectQuote, discussed the company's initial public offering in September 2020 during an appearance on CNBC's "Squawk Alley." He described the IPO as reflecting the company's 35-year history of providing consumer solutions for families, health, and property, and said the launch in a virtual environment demonstrated the business's solid fundamentals and resiliency. Danker noted that the IPO provided capital to hire additional agents, citing a rise in job applications during the pandemic. Danker characterized SelectQuote's business model as a direct-to-consumer hybrid combining digital tools and human advisory services. He stated that the company had seen heightened consumer awareness of health and protection insurance products during the pandemic, and he predicted that the shift away from in-home insurance sales toward online research and phone-based connections would continue. Danker also mentioned investments in technology, including a partnership with Amazon Web Services for cloud infrastructure, and data science initiatives aimed at lead generation, customer retention, and cross-selling. He said the company works with over 50 insurance carriers and that those partners were seeking more integrated collaboration during the pandemic.
Transcript (10 segments)
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Reporter0:00
I just gotta start with the whole virtual thing. It's good to see an IPO happen, but is the experience and the process much different virtually than it would have been if we were talking to you on the floor today?
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Timothy Danker0:13
Well, we certainly probably had a little different plan in mind around our roadshow, but it certainly feels great. It's exciting to be first in terms of a virtual IPO. And it's been in the works for a long time. It really reflects a lot of hard work of all of our associates. We've been building a business for 35 years, focused on providing consumer solutions for what they value most: their families, their health, and their property. Being able to launch this IPO in this type of environment reflects the solid fundamentals of the business as well as its resiliency. So we're very excited.
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Reporter0:53
Yeah, I think a lot of our viewers probably are familiar with your ads, which have been running on our air for a long time. I'm curious, are you making the argument that even in the framework of this virus, the digitization of insurance continues and even accelerates as people try to compare products virtually? Can you talk about that?
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Timothy Danker1:12
That's right. Our business model is what's called a direct-to-consumer business model, where we are really combining a hybrid model: both digital as well as human advisory services. That's been part of our model for 35 years. We launched the first direct-to-consumer term life exchange in 1985 with our founder, Chairman, and CEO. Then we've extended that into two other high-growth verticals: senior healthcare and auto and home. Our senior business is really riding strong demographic tailwinds, as over 10,000 seniors turn 65 every day, as well as the popularity of Medicare Advantage and Medicare supplement plans that we distribute. The way consumers want to interact is also shifting: being able to do research online but ultimately connect with a highly skilled agent that can help guide them through the process.
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Reporter2:11
Yeah, and you do seem to be right in the sweet spot in terms of the industry, which I think is being reflected in how the stock is trading up 40% right now. Essentially acting as this matchmaker between the insurance companies and consumers, taking that commission from the insurance companies. Given all the impacts we're seeing right now from this coronavirus pandemic, what has consumer activity looked like, and what has the ability to strike deals with some of these different insurance companies actually meant?
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Timothy Danker2:42
Great question. Overall with respect to COVID, we have seen heightened consumer awareness of insurance products, especially the health and protection products that we distribute. We're seeing that in terms of our lead generation and marketing capabilities. But I think now more than ever, consumers want to make sure they're on the right plans for their specific needs. I'd also say regarding the shift in distribution, historically there's been a lot of in-home, across-the-kitchen-table selling of insurance. Our model allows consumers to do research online and then connect over the phone. We think that trend is going to continue. Finally, we're excited about the size of the IPO; it gives us the capital to really supercharge growth for the company. Part of that is hiring additional highly skilled agents, and there are a lot of hardworking Americans out of employment right now. We're seeing very strong job applications, up over three times our normal levels, and we look forward to being able to help in our own small way.
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Reporter3:59
Hi Tim. You talk in your S-1 quite a bit about analytics and the need to control your marketing spend and deliver a better experience through using data and your proprietary algorithms. I haven't been able to figure out to what extent you are active in the cloud, to what extent you're using AI tools from some of the major platforms to enhance that. Talk to us about your strategy. Are you partnered with any major tech providers? The use of AI tools, and how do you intend to get smarter with those algorithms to enhance the business?
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Timothy Danker4:39
Yes, we've made significant investments in our technology stack, not only things that are helping our agents become more productive and tools that ensure our underlying clients get on the right plan with the right carrier, but also a significant investment in data science that has helped us with lead generation, customer retention, and cross-sell capabilities given the breadth of our three different insurance lines. With respect to who we partner with, we actually work with Amazon in terms of cloud, which has allowed us to be very flexible in our approach to technology.
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Reporter5:22
Lloyd's of London originally came out and expected, or I guess called, that coronavirus could be the largest loss on record for the industry. Where do you expect rates to ultimately go from here, given that there are different lines of coverage you're involved in?
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Timothy Danker5:40
With respect to our carrier partners, I think they're wanting to work with us at an even more tightly integrated level. It's always been a hallmark of the company that we manage over 50 different high-quality blue-chip insurance carriers. We continue to work with them to help them through this time, and they're looking to continue to grow their businesses as well. Direct-to-consumer businesses like SelectQuote have proven to be highly resilient, and I think we'll continue to partner together as we work through this.