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Pethealth Inc. (“Pethealth” or the
“Company”) is the second
largest provider of accident and illness insurance for dogs and cats
to pet owners inNorth America. In addition, the
Company has become a leading provider of pet recovery database
services in North America, a market
it entered in February 2003 under the 24PetWatchTM brand name.
Furthermore the Company developed and commenced a successful rollout
during 2005 of PetPointTM, its web-based management software
application for animal shelters. The Company’s vision is to be the
leading provider of insurance and integrated health related
information services to the North American companion animal
market.
Pet Insurance Services
The Company started selling its pet insurance programs
in
Canada and the
United States
in 1999 and 2001
respectively. Its pet insurance policies are limited to major
medical coverage designed to cover accidents and illnesses. The
Company’s pet insurance programs are currently available to pet
owners in 49
U.S.
states + D.C. and 10
Canadian provinces. The Company markets its insurance programs
through five distribution channels: animal shelters and rescue
groups; corporate partners; veterinary clinics; its own on-line
broker network; and its own direct to consumer advertising
campaigns. In order to leverage these distribution channels, the
Company, when appropriate, employs a strategy of co-branding and
private labeling to maximize pet owner appeal. The Company’s pet
insurance programs are currently marketed under several brand names
including PetCare, CherryBlue, ShelterCare and QuickCare and its
co-branding partners including Petco, MetLife and Union Privilege.
The Company offers its pet insurance programs through its wholly
owned subsidiaries PetCare Insurance Brokers Ltd., PetCare
Insurance Agency, Ltd. and PTZ Insurance Agency, Ltd. (collectively “PetCare”).
In the United States, PetCare currently operates its' pet insurance business under a Managing General Agency Agreement (“MGA Agreement”) with Praetorian Insurance Company (“Praetorian”). Under the MGA Agreement, PetCare participates in a portion of the underwriting results and is also responsible for all product development, marketing and sales, claims adjudication, medical underwriting and premium collection including the management of the underwriters ' premium trust accounts.
In Canada, PetCare operates its pet insurance business under a MGA Agreement with Lombard General Insurance Company (“Lombard”). The Canadian MGA Agreement is similar in nature to the U.S. MGA agreement described above. PetCare does not assume any underwriting risk for policies placed in Canada.
Non Insurance Services (Integrated Health Related
Services)
During
2002, the Company determined that to maximize long term shareholder
value it would take advantage of opportunities to develop
complementary products and services within the North American
companion animal market. These new services, while outside of its
core business of insurance, would be selected on the basis of their
ability to not only create new revenue streams but also to enhance
the Company’s pet insurance business either by providing for a
greater number of policy sales or by consolidating the channels
through which it was currently distributing its pet insurance
programs. It was determined that to maximize the opportunity, some
of the initiatives undertaken in their initial states would not
necessarily be revenue generating but would provide the platform on
which significant revenue streams could ultimately be
created.
The
concept of providing free base platforms on both a Business to
Business and Business to Consumer basis is becoming more commonplace
within the financial services sector as a whole as a result of the
development of technology and specifically the Internet. Pethealth,
anticipating this trend, has placed itself at the forefront in
developing the concept of free platforms for pet owners (24PetWatch
free registry), animal shelters (PetPoint) and veterinary clinics
(EVE) within the industry as a whole. The Company believes that
significant additional revenue streams can be generated by offering
complementary services that these clients of Pethealth will be
prepared to pay for given their value and overall
quality.
24PetWatch
The Company’s first move into non-insurance operations
was in the area of RFID (microchip) technology where the Company,
after conducting research in both Canada and the United States,
determined that pet insurance and RFID technology for companion
animals was complementary and that the business models being used in
the microchipping space were unrobust and outdated. It is the
Company’s view that RFID technology is set to become commonplace in
the day-to-day lives of the consumer, not only in terms of the
consumer’s purchasing activities, but also with respect to the way
in which this technology will be linked to services which would
provide them with greater control and convenience in managing the
care of their pets.
Thus, Pethealth’s interest in the
promotion of greater usage of RFID technology is not with respect to
the sale of the technology itself, but in the sale of related
services that can be sold to the owner of pets implanted with a
microchip. However, to achieve this, the Company realized it was
going to, as a first stage, create greater user group confidence
amongst clinics and shelters in the use of microchip technology. As
such, the Pethealth model is initially based on providing lower cost
technology to clinics and shelters and to tie that technology to
free registration for pet owners. By providing free registration,
the Company is given direct access to pet owners registered with
24PetWatch, through which it can then promote other revenue
generating services. These revenue generating services include not
only the sale of its pet insurance, but also new and innovative
services such as 24PetMedInfo, which provides pet owners the ability
to have their pets’ medical information linked to their pets’
microchip number and is accessible to that pet owner at any
time.
PetPoint
In 2004, the Company incorporated Pethealth Software
Solutions (USA) Inc., through which the Company now offers the first
web-based management software application to animal shelters and
rescue groups under the brand name PetPoint. PetPoint has been
designed to help facilitate the growth of the Company’s core
insurance business through the Shelter channel in the most
cost-effective way possible and to consolidate that channel of
distribution. The base version of PetPoint is provided free to
animal welfare organizations using the ShelterCare pet insurance
program and the 24PetWatch microchip program.
As a
hosted solution, Pethealth believes it is best positioned to provide
the content to pet owners at the point of adoption. Through
PetPoint, its “virtual pipeline”, the Company has the unique ability
to inform adopters of dogs and cats of the products and services
that are available to them and influence them as to where they
purchase those products and services. The Company believes that this
will provide new revenue streams in time.
EVE
EVE is the first web-based software application
which allows for claims under the PetCare programs to be adjusted
online and for electronic registration of pets microchipped with
24PetWatch microchips. EVE allows the Company to reduce claims
settlement times, eliminates the paperwork associated with both the
claims process and microchip registration, and provides the Company
with a distinct competitive advantage over other providers of pet
insurance. EVE is
provided free to clinics using the Company’s 24PetWatch microchip
and pet registry program.
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