3 Things – Dellwood Launches, Hippo & Tesla Results & Earnings Roundup

Hello Friends!  We are back again with another edition of ‘3 Things We Learned’ our weekly post where we use the week of headlines in the insurance industry to tell a story tying everything into major themes.  This week, we are continuing to see launches and movements toward the future and new companies forming to take advantage of the opportunities particularly in the excess and surplus market.  There were more notable earnings reports from Liberty Mutual, Nationwide and insurtech Hippo among many others.  While not public, Tesla shares their premium growth and other key financial metrics offering a look into auto insurance provided by vehicle manufacturers, a growing segment of the market.   Let’s delve into what we learned this week as we continue on into March.

Dellwood is Unveiled, DOXA acquisition & Resilience Launch

We continue to see a flurry of launches and acquisitions, particularly within excess and surplus lines, each designed to leverage market opportunities and address specific industry gaps.

In one of the biggest moves in recent weeks, insurance executives Michael Price and Kean Driscoll unveiled Dellwood Insurance Group, a new E&S property and casualty company aimed at reshaping coverage for small and medium enterprise (SME) risks. With over $250 million in capital and support from heavyweight backers like RenaissanceRe, PartnerRe, Starr Insurance, and Central Insurance, Dellwood is set to offer exclusive services to wholesale brokers nationwide. This launch not only fills a crucial niche but also demonstrates a strong vote of confidence from some of the industry’s most respected names, underscoring the potential for innovation and growth in the SME insurance segment.

DOXA Insurance Holdings continues its momentum after its recent re-capitalization with the acquisition of R.V. Nuccio & Associates (RVNA), stepping into the entertainment and sports insurance sector.  This acquisition represents a foray into a new, vibrant market, promising to diversify DOXA’s offerings with event-related coverage. With RVNA’s technology-centric approach and direct-to-consumer model, DOXA is poised to enhance its service capabilities, signifying an ambitious step forward in catering to the unique demands of the entertainment, sports, leisure, recreation, and non-profit sectors.

Cyber risk management firm Resilience announces the launch of Technology Errors & Omissions (E&O) coverage, targeting U.S. organizations with revenues between $300 million and $10 billion. This move enriches Resilience’s existing cyber insurance offerings, introducing up to $10 million in limits for both primary and excess placements. With a focus on addressing liability from technology products and services, Resilience leverages data-driven risk models and deep underwriting expertise to fill a critical gap in the market.

Hippo and Tesla Insurance Report Notable Results

In the insurtech landscape, two companies this week reported notable results: Hippo in the homeowners insurance sector and Tesla Insurance in embedded OEM auto coverage.  Both companies have reported their latest results, showcasing significant growth, strategic milestones, and the challenges they will continue to navigate throughout the upcoming year.

Tesla Insurance has accelerated its presence in the auto insurance market, reporting $497 million in written premiums for 2023. This nearly half-billion-dollar milestone represents a year-on-year increase of 115%, highlighting the demand for its unique insurance products tailored to Tesla’s technologically advanced vehicles.  Despite facing challenges such as a high combined ratio in some states and legal scrutiny over premium calculations, Tesla Insurance’s innovative approach, leveraging telematics and safety features, underscores its commitment to redefining auto insurance.  However, the path has been dotted with obstacles, including adjusting to the high costs of repairing technology-laden vehicles and navigating the complexities of the insurance industry.

Hippo’s 2023 was marked by significant growth and operational efficiencies. With Total Generated Premium (TGP) rising 40% from $811 million in 2022 to $1.1 billion, and revenue increasing by 75% to $210 million, Hippo’s strategic focus on its Services and Insurance-as-a-Service (IaaS) segments has paid off.  These segments, along with structural reinsurance changes, have propelled Hippo’s revenue growth, outpacing the increase in TGP.

Looking ahead, Hippo sets an ambitious revenue growth target of over 60% for 2024, aiming to exceed $340 million. This optimism is rooted in the company’s strategic actions in 2023, including the expansion of its consumer agency and the Insurance-as-a-Service business, aimed at reducing volatility and streamlining operations. President and CEO Rick McCathron’s reflection on 2023 as a transformational year and the anticipated positive adjusted EBITDA by Q4 2024 demonstrates Hippo’s resilience and focus on sustained growth.

Liberty, Nationwide, Am Fam & Other Earnings

This week’s earnings reports offer a similar look to the themes we’ve been seeing throughout the 2023 results cycle.  Major insurers and niche players are navigating current market dynamics, managing risks, and leveraging opportunities for growth and profitability.

Liberty Mutual reported an increase in fourth-quarter net income to $654 million and a 5.4% growth in net premium written. The insurer’s strategic focus on improving combined ratios and reducing catastrophe losses showcases its ongoing effort to reduce risk exposure.  Despite challenges, Liberty Mutual’s profit improvement program including recent layoffs and strategic de-risking efforts indicate a firm commitment to sustainable growth.

Nationwide achieved a third consecutive year of record sales, surpassing $60 billion in total sales for 2023.  This performance, driven by strong results in financial services, excess & surplus lines, and agribusiness, highlights Nationwide’s diversified business model’s resilience amidst industry-wide challenges, including severe weather events and inflationary pressures.

American Family Insurance managed to reduce its net loss significantly, despite a rise in catastrophe losses to $3.5 billion.  The company’s emphasis on managing claims severity and strategic layoffs as part of its consolidation efforts reflect a focused approach to navigating a challenging weather year and the broader economic landscape.

Hamilton Insurance Group’s impressive turnaround with a net income of $126.9 million in Q4 2023, compared to a net loss in the previous year, underscores the potential of specialty insurance and reinsurance classes.  The firm’s successful IPO and favorable pricing conditions in the current market environment are testament to its strategic positioning and operational efficiency.

HCI Group’s growth, with a fourth-quarter net income jumping to $40.9 million, illustrates the effectiveness of its strategic initiatives, including the launch of Condo Owners Reciprocal Exchange and policy assumptions from Citizens Property Insurance Corp.  HCI’s ability to raise significant capital and expand its market reach through new exchanges indicates strong market confidence and a forward-looking approach.

SCOR showcases strategic adaptability with its decision to reduce exposure to climate-related and U.S. casualty risks. The reinsurer’s emphasis on managing climate-sensitive risks, alongside a significant improvement in net income and combined ratio, reflects a proactive approach to navigating market volatility and enhancing profitability.

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!