Financial services firm Moody's announced Monday that it has agreed to acquire geospatial AI startup Cape Analytics for an undisclosed sum.
The transaction is expected to close in the first quarter, subject to customary closing conditions, and will provide Moody's access to Cape's geospatial AI analytics technology in its underwriting operations. Moody's CEO Rob Fauver said the company plans to use the technology to build a real estate database that can provide “address-specific” risk insights to insurance customers.
Cape's withdrawal comes as the insurance industry ramps up its adoption of AI and predictive analytics technologies. A 2024 study by insurance asset manager Conning found that 77% of insurance companies are at some stage of implementing AI, an increase of 16 percentage points from the previous year. According to one estimate, the value of global AI in insurance markets will reach $79.86 billion by 2032.
Critics have warned that AI technology could introduce bias and discriminatory decision-making into underwriting. But many insurance companies are moving forward, encouraged by AI's promise to speed up claims processing and improve overall efficiency.
Suat Gedikli and Ryan Kottenstette founded Mountain View, California-based Cape in 2014. Kottenstette was previously a senior engineer at BMW and then a principal at Khosla. Meanwhile, Gedikli was a research engineer at robotics technology incubator Willow Garage.
Through partnerships with geospatial imagery providers, Cape acquires satellite imagery and applies in-house algorithms to extract structured data such as whether a property has solar panels and the condition of the roof. Convert to real estate information database.
Kottenstedte claims that nearly half of the top property and casualty insurance companies and some of the world's largest banks use Cape to inform pricing and underwriting strategies.
Kottenstedte said Cape had successfully raised $75 million in venture capital from investors including Formation 8, Pivot Investment Partners and State Farm Ventures before exiting, and the company's cash flow was The company is said to be making a positive profit.
Kottenstedte said in a blog post that he believes Moody's and Cape together can bring “deeper” solutions to carrier underwriting workflows and provide a “more complete picture” of risk. Moody's clients can expect more detailed property-specific data, including building characteristics, average annual loss estimates, valuations and more, Kottenstedte added.
“Now that Moody's has access to broader and more diverse information, we can now further broaden and deepen Cape's solution by including additional orthogonal risk-related inputs.” writes Kottenstedte. “Moody's global scale has the potential to accelerate our expansion into international markets. [and its] Collaboration with financial stakeholders beyond insurance companies could accelerate the adoption of Cape's services within the mortgage ecosystem and by other financial stakeholders. ”
Cape is Moody's first acquisition of 2025 and its 23rd acquisition to date, according to funding database Tracxn. In addition to Moody's other property and casualty insurance mergers and acquisitions, Mr. Cape is responsible for P&C analysis provider Pradycat and climate and natural catastrophe risk modeling firm RMS.