3 Things – Q2 Earnings Begin, 3rd-Party Capital & New Insurtech Partnerships

Hi Friends! It’s great to be back with you. After the midyear break, the past two weeks have been eventful, with ongoing trends gaining momentum for the 2nd half of 2024. This week’s edition focuses on the start of Q2 2024 earnings, where the industry is eager to see our progress as the industry has adjusted to the economic environment and rates adjustments have had time to take affect. Third-party capital investments are on the rise, and insurers are positioning themselves to take advantage of this stability and an increasingly active IPO market. Meanwhile, the insurtech movement is advancing with the launch of innovative products and business models. Let’s delve in again and explore the three things we learned this week.

Q2 Earnings Begin, Insurers Strong Despite Continued Catastrophe Losses

As the Q2 2024 earnings season kicks off, major insurers like Travelers, Marsh McLennan, and Progressive report strong financial results amidst ongoing catastrophe losses.

Travelers reported a significant turnaround with a second-quarter net income of $534 million, compared to a net loss last year. Chairman and CEO Alan Schnitzer highlighted strong pricing driving a 9% growth in personal insurance premiums, particularly 10% in auto and 8% in home. The company improved its combined ratio by 6.3 points to 100.2 and reduced its net underwriting loss in personal insurance.

Marsh McLennan reported a second-quarter net income of $1.13 billion, up from $1.04 billion, driven by 8% revenue growth in Marsh insurance broking and 10% in Guy Carpenter reinsurance broking. CEO John Doyle highlighted 6% underlying revenue growth and 130 basis points of margin expansion, and continued investments in talent and acquisitions. Additionally, Marsh expanded its Cyber ECHO facility capacity to $125 million, enhancing excess cyber insurance coverage for clients worldwide.

Guy Carpenter is introducing GC FloodShield, a parametric flood re/insurance mechanism offering customized flood coverage using near real-time hazard footprints. Guillermo Franco, Managing Director & Global Head of Cat Risk Research, highlighted the collaboration with Floodbase, KatRisk, and ICEYE in developing this innovative solution.

Progressive reported June results and second-quarter 2024 net income of approximately $1.5 billion and a combined ratio of 91.9, a significant improvement from the second quarter of 2023. For June, net income was $803 million, despite challenges in estimating losses from late May storms. Year-to-date, the combined ratio stands at 89.1 with net income of about $3.8 billion.

Allstate reports estimated catastrophe losses of $230 million ($182 million after-tax) for June, primarily due to 18 wind and hail events across various regions. For the second quarter, total catastrophe losses reached $2.12 billion pre-tax.

Third-Party Capital Flows through IPOs, Fundraising and Rebranding

Third-Party Capital continues to be attracted to the stable insurance market. IPOs are gaining momentum, and investors are pouring funds into risk capital ventures.

TWFG Insurance launched their IPO and shares rose 30% in the company’s first day of trading. IPO proceeds will be used to acquire LLC units, pay off $41 million in debt, cover fees, and fund strategic acquisitions and general corporate expenses. Founded in 2001, TWFG operates across 41 states and the District of Columbia.

Tangency Capital Ltd., a quota share reinsurance-focused investment manager, has raised $400 million in the first half of 2024, increasing its assets under management (AUM) to $1.8 billion. COO Dominik Hagedorn noted that both existing and new investors contributed to the capital inflow, recognizing the benefits of quota share reinsurance strategies, such as alignment, diversification, and capital efficiency, especially amid forecasts of an active hurricane season.

Everest Group is launching Mt. Logan Capital Management Ltd. (MLCM) to enhance its third-party capital offerings for institutional investors. This new platform will act as the exclusive source of risk-sharing and underwriting capacity for Everest Group, providing diverse investment opportunities.The initiative is part of Everest’s strategy to expand its reinsurance business and optimize its capital structure.

FM Global has rebranded to FM, unveiling a new logo and tagline, “Protect Your Purpose,” reflecting its evolution and commitment to client risk protection. Chairman and CEO Malcolm Roberts introduced the refreshed brand at the midyear meeting, highlighting the company’s nearly 200-year history and its ongoing focus on preventing property loss.

Insurtech Innovations Include New Partnerships and Value-Added Services

Insurtechs continue to evolve with key partnerships and technological advancements aimed at enhancing customer experience and operational efficiency.

Simply Business has partnered with EMPLOYERS to enhance its workers’ compensation offerings for small businesses. This collaboration enables Simply Business to provide digital quotes and bind policies for over 300 types of small businesses across eligible states. The expanded offering aligns with Simply Business’ mission to make insurance accessible and affordable for small businesses, leveraging its digital platform to meet customers’ needs efficiently.

Bold Penguin has partnered with RT Specialty to expand its excess and surplus (E&S) commercial insurance offerings through the RT Connector digital marketplace. This collaboration aims to meet the growing demand for E&S coverage, providing agents using the Bold Penguin Terminal with additional policy options that address the evolving needs of business owners. Bold Penguin now offers a streamlined process for accessing both admitted and non-admitted market coverages, significantly improving the speed and efficiency of obtaining quotes.

Cover Genius has partnered with Priceline to offer enhanced travel protection for flights, hotels, rental cars, and packages through the XCover platform. This integration allows Priceline customers to easily review policy details, access support, file claims, and receive instant payments for approved claims in over 90 currencies. Cover Genius’ innovative approach, backed by AI and a single API for multiple insurance lines, has already increased insurance attach rates for Priceline.

OpenRoad, a new auto insurance provider for classic and modern collector vehicles, officially launched, offering superior coverage at competitive rates. Addressing the rising auto insurance costs, OpenRoad provides tailored policies that reflect the special care given to collector cars, resulting in lower premiums.

Aspen Insurance Holdings Limited has launched Aspen Data Labs, a new platform dedicated to advancing Aspen’s digital strategy through data science and artificial intelligence (AI). The initiative aims to enhance operational efficiency and business outcomes in underwriting and claims processes by fostering collaboration among employees and partners. Aspen Data Labs will offer access to AI platforms and tools, promoting innovation and improving core business functions.

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!