3 Things – Auto Sector Adaptations, Insights from Monte Carlo & Revival and Investment Waves

Hello Friends!  With another week of insurance and fall season upon us, we continue to see established insurers tweaking their strategies and newcomers bringing fresh perspectives, we continue to witness a tapestry of changes that are both exciting and challenging. This week, we zoom into the nuanced developments in the auto sector, updates from the fronting and reinsurance spaces, and a look at Hippo’s strategies and Kin’s impressive growth trajectory. So, let’s delve into the three things we learned this week!


Auto Sector Adaptations: Pullbacks, Shifts, and Innovative Avenues

The auto sector is brimming with shifts and transformations. Recently, The Hartford’s CEO, Christopher Swift, shared at the KBW Insurance Conference that the firm expects their auto book to finally turn profitable by 2025, with plans to substantially increase rates over the next year to meet targeted margins and ROE goals by 2025. In a parallel development, AmFam’s Main Street America is pausing new monoline auto policy sales and auto coverage for a year, though the renewal business remains unaffected.

In the innovation frontier, Apple has teamed up with AAA to launch a new roadside assistance feature, leveraging satellite connectivity to ensure safety and convenience even in areas without cellular or WiFi service. Meanwhile, Tom Troy transitions to USAA after resigning as the president and CEO at CSAA Insurance Group last month. In his new role as chief transformation officer, Troy seeks to bolster ongoing transformations at USAA, potentially fostering partnerships with companies like Apple to revolutionize their auto sector strategies.


Fronting and Reinsurance Sphere: Insights from Monte Carlo

This week, the Rendezvous event in Monte Carlo served as a hotspot for the latest industry insights and announcements. One of the highlight revelations was the fundraising initiative by industry stalwarts Willy Zeller and Steve Arora, who are steering towards establishing a $1bn Switzerland-based reinsurer startup, Alpine Re. The firm, targeting a launch next April, is poised to operate a low-cost model focusing on product diversification in mature markets.

Furthermore, the fronting market is experiencing a remarkable surge, evidenced by companies penning more than $13bn in gross written premiums last year, indicating a substantial leap from the preceding years. Amidst restructuring its reinsurance setup after a significant Q2 charge, Clear Blue is keen on preserving its current rating, in collaboration with AM Best. However, as the Vesttoo scandal unfolds, the industry anticipates heightened scrutiny and potential regulatory interventions concerning letters of credit.


Revival and Investment Waves: Hippo’s Reentry and Kin’s Growth Spurt

As Hippo prepares to reintegrate into the market, the firm is strategizing to modify its commission structure, a maneuver influenced by escalating reinsurance costs. However, the journey has been rocky, with a group of concerned shareholders urging Hippo Holdings Inc.’s board to commence a strategic review process due to purported unsustainable operations since its 2021 public listing.

Conversely, Kin has attracted a fresh wave of capital, closing a $33 million Series D extension. This development underscores investors’ renewed confidence in Kin’s business strategy and market focus, which has consistently fostered capital-efficient growth. Moreover, KKR is augmenting its investment in USI Insurance Services, a venture it embraced in 2017 alongside CDPQ and USI’s management and employees, signifying continued investment interest in the distribution segment of the insurance sector.

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