Hello Friends!  Here is your weekly dose of The 3 Things We Learned, a summary of the headlines in the insurance industry, brought together into themes that attempt to tell the story of the insurance industry.  This week the earnings reports picked up steam as some of the major players announced their full year and fourth quarter earnings while others gave previews.  In addition there were other notable stories featuring moves including launches and partnerships along with pullbacks and changes of direction that are along the lines of the trends we have seen in the last few months.  Let’s delve into these topics and explore what it means as we near the completion of the first month of 2024.  Here is an bonus extra long edition of the three things we learned this week.

 [1]

Earnings Season Ramps Up

Many of the headlines this week were full year and fourth quarter 2023 results which always give us an indication of how insurers are performing amidst the ever-changing market conditions.  Carriers that reported this week included RLI who saw a 17.1% increase in their net income and growth in net premium earnings powered by both underwriting and investment income.  Despite a strong quarter their full year net income fell by 47.8% and combined ratio increased slightly but is still a healthy 82.7.

W.R. Berkley reported record quarterly and full year underwriting and net investment income increasing overall net income to $397.3 million up from $382.2 million a year ago.  Rob Berkley highlights concerns about social inflation but remains optimistic about the excess and surplus market saying ‘I don’t think the party is over’ and indicated the company is actively exploring opportunities in the property reinsurance market and E&S commercial lines.

Progressive’s Q4 net income increased 141% and their December 2023 results reveal they ended the month with a combined ratio of 83.4% and 94.9% for the full year falling below their target of 96%.  They continue to increase their policies in force and appear to be on the other side of weeding out the unprofitable policies to create the best portfolio of risk, something they have always excelled at doing faster than the rest of the industry.

AXIS Capital provided a preview of their results announcing they were strengthening their prior year reserves by $425 million pre-tax.  When they formally release their earnings report next week they indicate that they have increased their net income and improved their combined ratio showing along with the other carriers that underwriting and investment income growth will be prevalent in most other carrier results.

In the broker world, several of the big names reported earnings headlined by Gallagher, Marsh and Brown & Brown.  Gallagher looks strong across the board benefiting from a strong 1/1 renewal process that already knew was more orderly than last year.  Marsh McLennan nearly doubled its fourth-quarter net income, with significant revenue growth in both risk and insurance services and consulting segments. The fourth-quarter net income rose to $756 million, and the 2023 net income was $3.76 billion.  CEO John Doyle described the upcoming year’s risk environment as complex, with recession risks for major economies. However, he also noted moderating inflation and the possibility of easing interest rates, making a soft landing more likely.  Marsh’s reinsurance broker unit Guy Carpenter showed substantial growth and investments, marking the second consecutive year of expansion.

 [2]

The Year Continues with Adaptations

We continue to witness transformation as companies embrace rebranding, strategic partnerships, and innovative solutions to adapt to the ever-evolving market landscape. Several players were at the forefront of this shift, exemplifying how agility and foresight can drive success.

The rebranding of Lombard International US & Bermuda to Axcelus Financial, following its acquisition by BroadRiver Asset Management, signifies more than a name change. It represents a strategic move to maintain leadership in the private placement sector, focusing on insurance-based solutions tailored for both individual and institutional clients. This rebranding underscores the importance of evolving with the market and staying ahead of client expectations.

Similarly, the launch of Sands Point Risk, a managing general agent, marks a strategic expansion into the financial and property and casualty insurance lines. With its Transaction Liability Insurance focus, Sands Point aims to protect entrepreneurs and investors from transaction risks. This move highlights how specialized insurance solutions are increasingly crucial in managing complex risks in business transactions.

In a related story, Vouch Insurance’s partnership with IMA Financial Group is a move to enhance its reach and service offerings. By launching the IMA Next.Gen program, they are directly addressing the unique insurance needs of startups in emerging sectors like technology, life sciences, and web3. This collaboration underscores the importance of adapting insurance solutions to the evolving needs of modern businesses.

CoreLogic’s collaboration with Artigem to launch advanced contents estimation capabilities for insurance claims management showcases the power of strategic alliances. By combining CoreLogic’s data-driven insights with Artigem’s technology, this partnership is set to transform the claims processing landscape, making it more efficient and user-friendly.

Cover Genius’s exclusive partnership with Vueling marks a significant step in customizing travel protection. Leveraging advanced technologies like AI and NLP, this collaboration aims to deliver personalized travel insurance solutions to over 30 million travelers.

 [3]

Investments, Retreats, and Amazon Closure

While companies like Porch Group and Ansel are making bold strides forward, others like The Hartford and Amazon are pulling back.

Porch Group’s announcement of a strategic agreement with Aon is a standout. This collaboration, infused with an upfront investment of $25 million and an additional $5 million over the next four years, signifies more than just financial backing. Porch Group’s CEO, Matt Ehrlichman, expresses a profound confidence in this partnership, which is set to redefine the company’s trajectory through 2028.

Ansel’s recent $20 million funding round along with another rebranding is the next step in their mission to simplify supplemental insurance for Americans. With a total raise of over $50 million, Ansel is aiming to alleviate the financial stress associated with health hardships. Their automated claims process and expansive coverage, spanning over 13,000 conditions, showcase an innovative approach in the supplemental insurance space.

In a surprising turn, Amazon’s decision to shut down its UK insurance venture reveals a crack in the armor of what many perceived as an impending industry disruptor. This retreat, while specific to the UK market, sends ripples across the global insurance sector, challenging previous assumptions about the role of Big Tech in insurance.

The Hartford’s pullback from the California homeowners’ market is the latest carrier to pull out amid the challenges and regulatory uncertainty.  The Hartford joins others like State Farm and USAA signaling to California regulators that they need to continue to make changes to avoid market disruption.

Join us as we continue to explore the headlines and news shaping the insurance sector, and stay tuned for more insights on the unfolding narrative of our industry!  Stay productive, stay safe and stay in touch!