3 Things – Parametric Innovations, MGA Boost, Bowhead IPO & State Farm Resilience

Hi Friends!  Here is our Memorial Day Weekend edition of ‘3 Things We Learned’ our weekly post using the headlines from the past week to tell the story of insurance.  With the unofficial start of summer comes a bit of slowing down but there were still many stories to follow, including the movements of new parametric solutions showing signs that is still a trend.  MGAs were active this week, and a specialty insurance operation’s successful IPO showed signs that the momentum is continuing in the specialty distribution arena.  State Farm details a wide loss but our friend Ian provides an insightful analysis of how they can continue to lose money for a long time.  We hope everyone is slowing down a bit this weekend and taking a break but will enjoy our quick read. Let’s delve into what we learned this week.

Parametric Innovations and Innovative New Offerings

Parametric products continue to be an innovative trend. In addition to these new offerings, others in the auto market, small commercial, and personal cyber risk abroad highlight the ongoing innovation in insurance.

Howden has acquired MiCRO to strengthen resilience in underinsured communities by expanding access to parametric insurance against natural catastrophes. This acquisition supports Howden’s commitment to using insurance for social good and addressing climate change impacts on vulnerable populations.

NormanMax Insurance Holdings has partnered with Apollo to launch Lloyd’s Syndicate 3939, the first syndicate focused on natural catastrophe parametric re/insurance products. This initiative addresses the natural disaster protection gap using advanced data and technology amid increasing climate risk.

OpenRoad Insurance LLC, led by industry veteran Richard Hutchinson, has launched as a managing general agency specializing in collector vehicle auto insurance. Supported by Griffin Highline Capital and National Interstate Insurance Company, OpenRoad aims to provide specialized, comprehensive coverage tailored to auto enthusiasts’ unique needs.

NEXT Insurance has launched a new AI-powered solution that instantly generates customized insurance quotes for LegalZoom’s small business customers. This innovation streamlines the insurance application process, significantly reducing the time needed to obtain quotes and enhancing the overall user experience. This offering leverages NEXT’s expertise in data-driven underwriting and strengthens its partnership with LegalZoom.

BOXX Insurance has partnered with Zurich Insurance Group to launch a cutting-edge personal cyber protection app in Switzerland. This app offers comprehensive digital safety features, including identity protection, secure VPN, and emergency support, to protect individuals and families from digital threats.

MGAs Boost Growth with Funding, Partnerships and Leadership Changes

MGAs continue to be an ongoing area of investment, partnerships and executive movements.  The E&S market growth and drive to cover risks with niche products has been the main theme of this ongoing trend.  This week featured many stories of MGAs with momentum and established carriers looking to partner and executives moving into the space.

Cover Whale made the biggest splash announcing a $27.5 million investment from Morgan Stanley Expansion Capital to support its continued growth and innovation in the commercial trucking insurance sector. This investment aims to bolster Cover Whale’s mission to transform trucking insurance, improve road safety, and deliver a superior insurance experience for agents and drivers.

Paragon Insurance Holdings has partnered with Ascot Group to enhance its public entity casualty insurance program, Trident Public Risk Solutions. This collaboration combines Paragon’s expertise in specialty insurance with Ascot’s global capabilities, aiming to deliver comprehensive client solutions.

Distinguished Programs has partnered with SiriusPoint to launch a new Inland Marine insurance program, offering tailored coverage for exposures such as Motor Truck Cargo, Contractors’ Equipment, and Builders’ Risk. This nationwide program aims to provide comprehensive solutions for contractors and logistics providers, supported by SiriusPoint’s “A-” rated backing.

John Doucette, former President and CEO of Reinsurance at Everest Group, has been appointed as the new CEO of Amynta Risk Solutions, effective May 2024. Doucette brings extensive experience from his previous roles, and aims to leverage his expertise to lead Amynta’s Property, Casualty, Specialty insurance, and Warranty and Protection services.

Bowhead IPO Outperforms Expectations; State Farm Demonstrates Resilience Amid Losses

Bowhead Specialty Holdings, a specialty property and casualty insurer, raised $128 million in an oversubscribed IPO. It exceeded initial expectations by selling 7.5 million shares at $17 each and seeing shares soar 40% following the IPO. This successful IPO highlights the strong demand and attractiveness of the IPO market for specialty insurance businesses seeking to raise capital and enhance financial flexibility.

State Farm reported a significant reduction in its Q1 2024 underwriting losses, decreasing from $3.3 billion in Q1 2023 to $1.35 billion. The auto carrier showed the most improvement, cutting losses from $2.87 billion to $1 billion while increasing written premiums to $15.9 billion. Despite a combined underwriting loss of $14.1 billion in 2023, State Farm mitigated its overall net loss to $6.3 billion through investment income and positive results from its life insurance business.

In his insightful blog, our friend Ian highlights that despite State Farm’s substantial underwriting losses, the company continues to grow its surplus due to significant investment gains. With a $75 billion capital cushion, State Farm can sustain these losses indefinitely, leveraging its robust investment portfolio to maintain financial stability while competitors struggle to keep pace.

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!