Hello Friends!  Wow, between a busy Target Markets event and a rush of headlines, this was one of the busiest weeks of the year. Target Markets hosted its largest-ever attendance, and conversations were plentiful about the rise of specialty insurance programs and the need to leverage data and technology. As far as news goes, we saw similar themes that included troubled mega insurers, ventures and investments in MGAs, technology, and opportunities to expand and grow. Let’s use these headlines to tell the story of the industry and delve into the three things we learned this week:

 [1]

Mega-Insurers in the Hot Seat

AM Best reports that they have doubled the number of insurers to whom they have given downgrades. The number is now at 21, compared to 10 last year. They caution insurers that if you are lagging behind in tech and adaptation, you should expect rate pressure, even though commercial carriers are well-capitalized. Allstate may be the poster child for these problems. They issued a warning that they will report $1.2 billion in catastrophe losses in Q3 2023, with 17 major events in September alone. Activist investor Nelson Peltz’s Trium hedge fund has made a move to build a position in Allstate, which could lead to a potential shake-up. Travelers reported a significant drop in net income, attributable to climate change and geopolitical instability. They continue to push for strong rate increases to help stem these losses. Hanover also warned they will report losses of $195.8 million due to hail and wind damage in their personal lines book. GEICO announces a 6% reduction in force and a return-to-the-office mandate. In stark contrast, Marsh, the first major broker to report earnings, announced a 15% YoY increase in revenue from strong all-around growth in multiple sectors and international markets. Truist Insurance, which we learned last week was on the selling block, also reported a sharp increase in revenue, enhancing their valuation as the bank looks to divest.

 [2]

IPOs, Mergers, and Money in Specialty Insurance

Hamilton officially filed their S-1 to prepare for their IPO. Ascot is following in their footsteps and is reportedly looking at options to divest their MGU Ethos, which writes an estimated $300 million in premium. Howden announced they have created a £500M investment pool for insurtech and MGA models to supercharge product development. Accelerant acquires Omega Insurance to break into the Canadian market. Risk Strategy and One80 Intermediaries announce a brand merger and will now be known as Accession Risk Management. KKR announces a new tech growth fund of around $3 billion, aiming to capitalize on digital transformation trends and the growing impact of tech in daily life. The fund received support from various types of investors, including insurance companies.

 [3]

Future-Proofing The Industry

Climate risk innovation continues to be attractive for investment. RiskThinking.AI launches a new product, VELO, a uniquely purely stochastic solution for measuring climate financial risk, powered by over 100,000 of the latest climate data sets, 3.5 million assets from over 250,000 companies worldwide, and 16 billion multi-factor stress tests, delivered in near real-time. Nirvana, a commercial fleet insurance startup, closed a $57 million Series B round. They have an AI-powered safety program. Digital payment network iink closed a $12 million Series A round. Their network expedites the disbursement of funds for multi-party property insurance claims, aiming to solve the problems associated with long delays in settlement. White Mountains is acquiring a majority stake in Bamboo, a tech-enabled property MGA focused on California homeowners’ insurance. The investment is expected to be approximately $285 million for 70% of Bamboo’s outstanding shares. Finally, bolttech announced they are acquiring an embedded protection company, Digital Care, a strategic move to expand their global footprint in the embedded protection space. Cover Whale introduces ‘Bob,’ an AI-powered chatbot to streamline agent/policyholder communications.

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!