3 Things – Ambac International Move, Climate Risk & Private Equity Funding

Hi Friends! After a brief hiatus, we’re back and buzzing from an exciting Insurtech Week in NYC—now a staple event in the heart of the insurance industry. The unique energy of New York City never fails to inspire. As we take a summer pause before the busy fall conference season, the news cycle has ramped up with notable highlights. Ambac made a significant move forward as a specialty insurance platform with global ambitions. The first week of the 2024 hurricane season has passed, with the industry bracing for challenging forecasts. Meanwhile, investments are fueling innovation, new launches are underway, and companies are making key executive shifts and structural changes.  Let’s dive in again and explore the three things we learned this week.

International Moves, Restructuring and Leadership Shifts

Ambac Financial Group is acquiring a 60% stake in Beat Capital Partners Limited, a London-based insurance underwriting and MGA platform. This acquisition will bolster Ambac’s position as a leading specialty program insurance platform and accelerate its goal of generating over $100 million in annual EBITDA. Additionally, Ambac is divesting its legacy financial guarantee businesses to Oaktree Capital Management, streamlining its focus on specialty property and casualty insurance. “We are now positioned as a pure-play specialty P&C platform with a clear strategy for the future,” said Claude LeBlanc, President and CEO of Ambac.

CNA Financial Corporation has announced that Doug Worman, currently Executive Vice President & Global Head of Underwriting, will become President and CEO on January 1, 2025. Dino E. Robusto will transition to Executive Chairman of the Board, continuing to advise Worman. This leadership change follows Robusto’s successful tenure, and Worman aims to further elevate CNA’s strategic underwriting direction and profitability.

Tesla has hired Allen Laben, a long-time GEICO executive, to help lower insurance costs for its electric vehicles. This move aims to enhance Tesla’s insurance offerings, which have evolved to include a safety score system based on real-time driving data, making owning a Tesla more affordable and increasing vehicle demand.

Axa XL is restructuring its Americas underwriting operations into three segments: large commercial, mid-market, and professional. This reorganization will result in an undisclosed number of layoffs as the company aims to optimize its regional model and better align with policyholder needs.

Hurricane Predictions, Flood Insurance, and Climate Risk Funding

This year, hurricane models predict an active season with 23 storms expected in the Atlantic, 11 of which may become hurricanes, including five major ones. Phil Klotzbach from Colorado State University highlights a higher chance of major hurricanes on the East Coast due to transitioning weather patterns and rising ocean temperatures, while Gulf states may see fewer storms.

Neptune Flood has secured over $300 million in premium capacity for the 2024 hurricane season, enabling it to protect up to 100,000 additional homes and businesses. This capacity expansion, supported by 25 insurance and reinsurance partners, leverages Neptune’s AI underwriting system, Triton, to provide precise risk assessment and underscores Neptune’s commitment to offering a robust alternative to the National Flood Insurance Program.

Understory, an insurance provider focused on climate risk, has secured $15 million in Series A funding to expand into the renewable energy sector. This funding will help Understory leverage its proprietary risk mitigation technology, which has already significantly reduced weather-related damages and claims. The company aims to offer scalable, tech-driven insurance solutions to climate-vulnerable industries, enhancing resiliency and supporting sustainable growth.

Aquiline and Bain-Backed Emerald Bay Lead the Way

Private equity continues to be a force driving innovation and expansion. Aquiline Capital Partners announced a new fund for strategic growth, while Emerald Bay Risk Solutions, backed by Bain Capital, launches a new earthquake insurance facility. These moves underscore the transformative power of private equity in the insurance sector.

Aquiline Capital Partners has raised over $3.4 billion, including $2.3 billion for its largest private equity fund to date, AFS V, and $1.1 billion for its Continuation Fund. This funding, supported by existing and new global investors, enables strategic growth and acquisitions in financial services. Managing Partner Igno van Waesberghe praised their industry knowledge and relationships, while Vincenzo La Ruffa emphasized Aquiline’s commitment to providing capital and expertise to outstanding companies, making them a powerful partner for industry leaders and innovators.

Emerald Bay Risk Solutions has partnered with Arrowhead to launch a commercial earthquake insurance facility for medium to large businesses in California and the Pacific Northwest. The facility offers over $250 million in capacity, backed by major reinsurers rated A- or better by AM Best. Emerald Bay CEO Dave Ingrey highlighted the strategic value of partnering with Arrowhead, while Arrowhead’s President, Lewis Defuria, emphasized the collaboration’s potential to innovate and enhance market access for this niche product.

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!