When Micah Carr-Hill wanted to insure Chief, the labrador that helps with his son’s autism therapy, he found an ally in Munich Re, the world’s biggest reinsurer.

The German company had just teamed up with a U.K. internet startup to provide pet insurance with the comprehensive cover Carr-Hill needed. Munich Re’s investment in London-based Bought By Many, which helps its customers find coverage for everything from bulldogs to Kindles, is an example of how reinsurers are plowing money into niche fintech providers to boost waning profits.

“Among the thousands of startups out there, some really good ones will emerge,” Torsten Jeworrek, a member of Munich Re’s management board, said in an interview. “We want to be at the forefront of this.”

Munich Re backs more than a half-dozen fintech providers, including London-based cell-phone insurer So-Sure and U.S. home insurer Lemonade Inc. Big players are getting more involved across the board. In 2012, insurers or reinsurers completed just one strategic investment in a privately-held tech company, according to venture-capital researcher CB Insights. They completed 100 such deals last year.

Investing in these startups provides reinsurers with an opportunity to diversify without encroaching on the business of their big insurance-company clients. It could also mitigate the effects of record-low interest rates and below-average catastrophe claims, which are reducing demand for their services.

Swiss Re launched a program last year to mentor “disruptive” insurance startups, while Allianz SE, Axa SA and XL Group Plc have all launched dedicated venture-capital funds to invest in the fintech industry. Hannover Re invested in FinLeap, a Berlin-based developer of technology companies, though its chief financial officer said the No. 3 reinsurer remained wary of the sector.

“For fintechs, reinsurance capital is a great alternative to help them finance growth,” Hannover Re CFO Roland Vogel said. “But we’re approaching the startup space very cautiously. You could easily burn a lot of money.”

Falling Profits

New Munich Re Chief Executive Officer Joachim Wenning said this week he’s looking for ways to increase earnings as his firm heads for a fourth straight drop in annual profits. Rivals including Swiss Re and Berkshire Hathaway Inc. also saw earnings hit by costs tied to natural disasters and years of falling reinsurance rates, while Hannover Re warned of a ‘” challenging” market outlook.

Munich Re has invested in, and provided underwriting for, on-demand insurer Trov and Berlin-based e-commerce insurer Simplesurance. Last year, it invested in Slice Labs, which provides insurance for Uber Technologies Inc. drivers, and Next Insurance, which aims to bring more tailored coverage to commercial photographers.

Munich Re started investing in Bought By Many in 2016, and also provides financing and underwriting for its pets service, which launched in February. The startup advertises online and via social media for customers and then negotiates group discounts or more tailored coverage.

So far, the strategy is paying off, with the five-year-old company’s sales doubling to just under 10 million pounds ($13 million) in the fiscal year ending in March. Bought By Many co-founder and Chief Executive Officer Steven Mendel expects that growth rate to continue or even accelerate now that it’s writing its own policies rather than just acting as a broker. Munich Re will be in line for a slice of the profits.

“We are currently generating premiums in the single-digit million euros from startups,” said Munich Re’s Jeworrek. “Risks are much more limited in areas such as pet insurance than in hurricane coverage. We’re maybe a bit more daring than other reinsurers.”

Munich Re, which invested about 3 million pounds in Bought by Many in a financing round in August 2016, is now working with the firm on creating the next offering, Mendel said in an interview. The next product will be travel insurance for people with medical problems who usually struggle to get coverage. “The U.K.’s first travel insurance without a medical question” is expected to be launched in October, he said.

Mendel is also thinking about more targeted motor insurance for musicians — an example of how the feedback his firm collects on clients can result in specialized coverage. “Currently, the rock musician driving home drunk after a late-night gig pays the same as the chamber musician driving to his afternoon concert,” Mendel said. “We could get the classical musician a better price.”