This morning, Kogan.Com Ltd (ASX: KGN) has announced that it has entered into an agreement with Greenstone Financial Services Pty Ltd allowing it to offer life insurance and funeral insurance under the new brand ‘Kogan Life Insurance’.
Kogan will earn commissions on every insurance policy sold. Initially, Kogan Life Insurance will offer value life insurance and funeral insurance policies. However, in time this range will likely grow to include other related categories.
Executive Director of Kogan, David Shafer, said that the partnership with Greenstone was a natural extension to Kogan’s existing insurance offerings.
Mr Shafer said “We are very pleased to partner with Greenstone, a leader and innovator in [the] Australian life insurance market, to offer life insurance products to our growing community of smart Aussies, enabling them to save more of their hard-earned money.”
Kogan Life Insurance is expecting to launch its offering to the Kogan Community within the current half year.
I think life insurance is a good addition to the stable of products that Kogan already offers. The business now has Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Health and Kogan Travel. All of these options are easy to sell online and scale up profitably.
The business has done very well over the past year, with the share price rising by 312% to today’s $6.64.
This move clearly makes Kogan a more attractive business proposition for investors, however I’d have a major question mark about investing today due to its current valuation.
Kogan is currently trading at 166x FY17’s earnings. This is clearly a huge price/earnings ratio based on historical earnings, so it really depends on how much the business grows over the next year or two to justify whether today’s price is worth a buy or not. It’s not a play I’d make, but I’d understand if any investors do want to buy today on the life insurance news.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.