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Hello Friends! This week we are following insurtech acquisitions and investment trends, Vouch / Corvus partnerships and a preview of the upcoming Q1 2023 earnings season. Here are the three things we learned: |
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Insurtech Acquisitions and Investment Trends We have known for awhile that there are insurtech assets for sale so it was interesting to see established specialty carrier Arch acquire insurtech Thimble. Thimble has a technology platform for small business insurance customers and agents featuring integrations to carriers including Markel and Employers. It would appear that the valuation, though undisclosed, was based on their tech platform which Arch will use to broaden digital distribution capabilities. It will be interesting to see how they leverage the carrier partnerships without having competition issues. We expect to see more deals like this unfold. Coverager reports that Policygenius is seeking a buyer. As funding sources dry up and unprofitable insurtechs run out of capital more opportunities will present themselves. Stonybrook Capital principals explain in this video there appears to be a flight to quality developing as insurtech 2.0 unfolds. There is still a record amount of capital ‘dry powder’ on the sidelines but more scrutiny is being paid to investments. As it stands there could be a supply problem with not enough investable companies. Insurance companies with strong balance sheets can take advantage of opportunities while the IPO and Banking markets take a pause. |
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Vouch, Corvus Partnerships Vouch announced their first embedded partnership with StartupOS. The platform designed for early-stage founders to manage their startup process will feature risk training modules provided by Vouch and a way to purchase much needed executive peril and other coverages that have become more important for founders these days. Cyber MGA Corvus, fresh off of announcing a new President last week, will be partnering with Core Speciality to provide Cyber and Tech E&O coverage for businesses with revenues below $500 million. This is Core Specialty’s first cyber offering. The program will offer up to $5 million in coverage and leverage Corvus’ technical and AI underwriting capabilities. It looks like a good partnership from both sides. Core Specialty is building a stable and strong speciality insurer and Corvus, like all insurtechs, needs a partner with a strong balance sheet. |
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Q1 Results Preview We are readying for earnings season that will begin soon. Already this week there have been some signs of what is to come. Progressive released March 2023 numbers and are 3 points above their target combined ratio of 96. They indicate loss reserve adjustments for personal auto products as the main driver of this result. In spite of these difficulties they are seeing net income growth of 43% in the first quarter aided by investment income growing 73% in the higher interest rate market. The Hartford, who themselves are likely an acquisition target, also previewed their upcoming Q1 results. Net income will grow $530 million despite a $185 million catastrophe loss. Their commercial lines combined ratio is 92.7 and in contrast, personal lines is 106.1 including $30 million of higher-than-expected losses from auto physical damage. |
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