3 Things – Reading Tea Leaves, Skyward Takes Flight & Capital Strategies

Hi Friends! As we head into the last week of the unofficial summer, the headlines are in less of a frenzy but there are still many interesting stories that help us understand the ongoing themes within insurance.  This week, we are reading the tea leaves from the latest results reports, eyeing two entities that made moves to target niche risk and exploring the unique capital strategies that can be deployed for growth and focus. Let’s explore the three things we learned this week.

Reading the Tea Leaves from State Farm, Nationwide, Swiss Re and Others

As results continue to roll in, we heard from two mega-insurers working to improve after the significant losses experienced over the past two years due to macroeconomic conditions. In addition, there were other stories from international players and an emerging insurtech embedded offering.

State Farm’s Q2 2024 financial results show a net underwriting loss of $4.35 billion, contributing to a $5.7 billion loss for the first half of the year. However, the auto insurance segment improved significantly, reducing its loss from $4.85 billion in the first half of 2023 to $3.26 billion in the same period in 2024. Despite these losses, increased written premiums and investment income helped mitigate overall financial strain.

Nationwide reported a significant reduction in net underwriting losses for the first half of 2024, down to $187.5 million from $1.5 billion in the same period last year. This improvement follows underwriting restrictions and portfolio management efforts despite decreased direct written premiums. The company continues to navigate challenging market conditions, implementing various measures to manage risk in its personal and commercial lines.

Swiss Re’s strong H1 2024 performance highlights the company’s focus on disciplined underwriting and strategic capital allocation, as emphasized by CEO Andreas Berger. He credits the firm’s resilience to its careful management of new business and attention to evolving loss trends, allowing Swiss Re to deliver consistent results despite a challenging macroeconomic and geopolitical environment.

Intact Financial expects $1.1 billion in catastrophe losses for Q3 2024, surpassing expectations. Severe weather events, including wildfires and floods across Canada primarily drove these losses. The company is now assessing its reinsurance program and risk management strategies to mitigate future impacts.

Ping An reported a 3.9% increase in insurance revenue for the first half of 2024, driven by strong growth in its life and health insurance segments. The company emphasized its continued focus on digital transformation and improving operational efficiency. Despite economic challenges, Ping An remains committed to leveraging technology to sustain growth.

Tesla General Insurance reported strong growth in Q2 2024, with written premiums rising significantly, 105% over the same period last year. While this demonstrates impressive growth, they struggle to be profitable with elevated combined ratios for the carriers that back them. It is unclear if they can correct these issues with their technology.

Skyward Takes Flight and Rokstone Forms Capacity Solution

Specialty carriers and MGA platforms continue to grow and thrive by targeting niche risks and forming innovative capacity solutions. Skyward Specialty Insurance has launched a new aviation insurance program with four veteran underwriters. This program aims to provide tailored insurance solutions for various aviation-related risks, including general aviation, private jets, and commercial operations. The partnership demonstrates their commitment to grow with specialty underwriting capabilities targeted at the industry.

Similarly, Rokstone has announced a multi-year capacity agreement with Accredited, supporting its expanding specialty insurance program portfolio. This partnership will enhance Rokstone’s ability to underwrite risks across multiple lines, bolstering its growth and market reach.

Capital Strategies: Funding, Debt Equity and 3rd Party

In the realm of capital strategies, we see different scenarios among tech providers and insurance entities looking to seize the marketing opportunity with solutions and operating models.

Archera, a cloud purchasing and management solutions provider, has secured $40 million in Series B funding and access to $100 million in reinsurance and lending capacity. The company’s AI-driven platform helps organizations make data-driven decisions on cloud investments and provides unique insurance protection and financing. With this funding, Archera plans to expand its offerings and enhance its platform’s capabilities to meet the growing demand for cloud cost management solutions.

Accession Risk Management Group, the parent company of Risk Strategies and One80 Intermediaries, has secured $1 billion in funding to accelerate its growth and expansion. The company plans to use this capital to enhance its product offerings, scale operations, and explore new market opportunities. The funding underscores the growing demand for risk management solutions and positions Accession as a key player in the industry, enabling it to continue growth by acquisition.

Ascot Group Limited has expanded its third-party capital capabilities by launching a dedicated platform, Leadline Capital Partners. This initiative, supported by new institutional investors, aims to enhance Ascot’s ability to manage and deploy third-party capital across various risk portfolios. The platform will focus on providing innovative and flexible capital solutions, strengthening Ascot’s position in the market and enabling further growth.

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!