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Hello Friends! We hope everyone is enjoying spring weather and getting out of the office early today. This week we are following the future of auto insurance, Carlyle acquiring NSM and Insurtech earnings takeaways. Here are the three things we learned: |
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The Future of Auto Insurance Throughout earnings season we have seen that auto insurance has been pressured by the macro conditions of inflation and supply chain disruptions. So this week we read several things and thought it would be beneficial to try to tie them together for a take on the future of auto insurance. Luckily our friend Ian does most of the heavy lifting in his blog post. Telematics was a big topic at the Berkshire Hathaway annual meeting, but not sure their take is quite right. The question we ask is telematics going the way of the connected vehicles and like Ian explains with autonomous vehicles. This week GM’s Onstar Insurance has now gone live Michigan and is available nationwide joining Tesla and others. Most cars on the road currently are not connected but how many years until they are and the manufacturers of those vehicles become the insurers with the most reliable telematics data. |
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NSM Acquired, MGA Valuations Stay High Private equity firm Carlyle acquired MGA NSM for $1.78B this week. NSM was writing $1B in premiums so this is a pretty hefty valuation for them that White Mountains could not pass up. For Carlyle and other private equities, they can invest back into the platform and bolt on additional pieces to leverage economies of scale. MGAs will be coveted assets going forward. Especially ones with niche focus and technology that can be added to with other acquisitions. |
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Insurtech Earnings Week Takeaways This week had more earnings reports to read through and the most interesting were the public insurtechs Lemonade, Metromile & Hippo. Metromile highlights on the third page of their letter that they sold the first the first bundled policies with Hippo. This is interesting in that Lemonade is already acquiring MILE and hopes to close in Q2. Will they continue to market Hippo or their own home insurance? Their CEO is now touting MILE as a tech platform that will power their auto product though it the tech hasn’t helped with loss ratio thus far. Hippo stock soared over 30% Friday after their earnings release which beat expectations and improved guidance for the remainder of the year. Does it seem plausible that HIPO could merge with LMND at some point? |
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