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Hi Friends! We are rolling along into November, time is moving fast, especially as we turn back the clocks and have shorten daylight. The new cycle is not slowing down and plenty of us are making moves to close out 2024 on a high note. It was another week dominated by earnings reports from insurers, including big players like Berkshire Hathaway, AIG, Liberty Mutual along with others. Again, we have a heavy section devoted to this topic and remain confident that the insurance industry is healthy and powering forward. Meanwhile, we are also following restructuring and divestitures, pointing to strategic pivots and capacity movements designed to open up opportunity to target niche risk segments. Let’s dive in once again and explore the three things we learned. |
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Berkshire / GEICO, AIG, Liberty Headline Earnings WeekBerkshire Hathaway faced mixed results in Q3 2024, driven by strong performance from GEICO but offset by challenges in its broader insurance operations. Despite a slight decline in policies in force, GEICO’s underwriting profit nearly doubled, primarily due to increased premiums and rate adjustments. CEO Warren Buffett’s focus on liquidity signals readiness for strategic investments, while GEICO’s rebound provides a silver lining amidst broader market volatility. In the Q3 2024 earnings call, AIG’s CEO, Peter Zaffino, expressed concerns about the insurance industry’s capacity to tackle the rising frequency and severity of losses through reinsurance alone. He emphasized that, while reinsurance is an essential tool for risk management, it cannot completely address the escalating challenges posed by increasingly frequent and severe events. Despite these concerns, Zaffino highlighted a positive quarter, noting strong growth in the liability and E&S segments. Liberty Mutual reported a significant increase in third-quarter net income, reaching $897 million, up from $215 million in the same period last year. Despite substantial catastrophe losses totaling nearly $1.1 billion, including $458 million from Hurricane Helene, this improvement occurred. CEO Tim Sweeney stated that the company remains focused on achieving a target combined ratio of 95 by 2025. Zurich Insurance Group reported a 4% increase in gross written premiums for its P&C segment during the first nine months of 2024, reaching $33.2 billion. This growth was primarily driven by a 5% rise in commercial insurance premiums. Group Chief Financial Officer George Quinn stated that the results demonstrate the company’s ability to deliver consistent growth and profitability amid challenging market conditions. Hamilton Insurance Group reported a combined ratio of 93.6% for Q3 2024, indicating improved underwriting performance compared to the previous year. CEO Pina Albo attributed these results to disciplined underwriting and a focus on profitability, stating that the company is well-positioned to capitalize on market opportunities. Fairfax Financial Holdings reported strong financial results for the third quarter of 2024, with net earnings attributable to shareholders reaching $1,030.8 million, compared to $1,068.9 million in the same period of 2023. Chairman and CEO Prem Watsa attributed these results to disciplined underwriting and effective risk management, positioning the company well for future growth. Munich Re reported a 31% increase in net profit for the first nine months of 2024.This growth was achieved despite significant natural catastrophe losses of €1.4 billion in the third quarter, primarily due to Hurricane Helene, which accounted for approximately €500 million in claims. CEO Joachim Wenning stated that the company is on track to exceed its full-year profit target, underscoring resilience amid challenging market conditions. Ryan Specialty reported a 20.5% year-over-year revenue increase in Q3 2024. Chairman and CEO Patrick G. Ryan attributed these results to the company’s focus on delivering specialized solutions and maintaining strong client relationships, positioning Ryan Specialty for sustained growth in the evolving insurance landscape. Meanwhile, they completed the acquisition of MGU platform Innovisk, which was announced last week. SiriusPoint Ltd. reported a combined ratio of 84.4% for Q3 2024, an improvement from 88% in the same period last year. CEO Scott Egan attributed these results to disciplined underwriting and strategic portfolio management, positioning SiriusPoint for continued profitability. Lancashire Holdings reported a 16.8% increase in insurance revenue for the first nine months of 2024, reaching $1.3 billion, up from $1.1 billion in the same period last year. CEO Alex Maloney stated that the company is in excellent shape as it approaches the final months of 2024 Bowhead Specialty reported a net income of $6.2 million for Q3 2024, marking a 12.5% increase from the $5.5 million earned in Q2 2024. CEO Stephen Sills stated that the results reflect the continued execution of their market cycle strategy and favorable underwriting and pricing in the Casualty division. White Mountains Insurance Group reported a decrease in pre-tax income from its investment in the Outrigger Re sidecar. This decline was primarily due to higher catastrophe losses, including impacts from Hurricane Helene. Despite these challenges, the sidecar maintained a combined ratio of 95% for the quarter, indicating disciplined underwriting. |
Strategic Changes Emphasizing Divestitures and RestructuringCompanies are increasingly focusing their strategies with restructuring and divestiture. Insurtech players have future options, while mutual companies continue restructuring to strengthen their balance sheets for future progress. Vertafore, a leading insurance software-as-a-service provider, has acquired Surefyre, a cloud-based submission and underwriting platform tailored for MGAs and wholesalers. Vertafore’s CEO, Amy Zupon, emphasized that this move underscores the company’s commitment to empowering MGAs with innovative technology solutions. Joyn Insurance announced that SiriusPoint Specialty Insurance will now handle its policy management responsibilities. This transition aligns with Joyn’s strategy to optimize operations, leveraging SiriusPoint’s infrastructure for better efficiency. Founded in 2020, Joyn has faced recent challenges, including workforce reductions, and aims to refocus its resources through this partnership. Swiss Re has agreed to sell iptiQ’s European P&C business to Allianz Direct, the online insurer of Allianz Group. As previously announced, this decision aligns with Swiss Re’s strategy to exit its digital white-label insurance operations. Allianz Direct plans to integrate iptiQ’s digital capabilities to enhance its European customer offerings. In its Q3 2024 earnings announcement, Hippo announced it has sold a majority stake in First Connect Insurance Services to Centana Growth Partners for approximately $48 million, with potential additional proceeds of up to $12 million based on performance targets. The capital infusion will allow Hippo to focus on its go-forward strategy. Grinnell Mutual is restructuring to create a holding company structure, aiming for greater capital flexibility. The plan includes converting Grinnell Mutual into a stock insurance company while ensuring existing policyholder rights remain intact. The move is expected to strengthen its financial position, especially after a profitable first half of 2024. |
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Capacity and Investment Indicate a Promising FutureInvestment continues to favor focused and value-added insurance ventures. Investment and capacity along with distribution partnerships showcase these players who have focused strategies to target opportunities in the market. Stere has partnered with EPIC Insurance Brokers & Consultants to enhance insurance services for small businesses. This collaboration combines Stere’s API-driven platform with EPIC’s risk management expertise to offer a comprehensive suite of insurance products tailored to small business needs. This initiative reflects the growing trend of embedded insurance solutions designed to streamline operations and improve customer experiences. Kova Professions, a specialist MGA, has entered into a multi-year capacity agreement with Hadron, a specialty insurance carrier. This five-year partnership, facilitated by the Accelerant Risk Exchange, enables Kova Professions to underwrite professional indemnity insurance with Hadron’s support. The collaboration aims to provide tailored insurance solutions to professional service firms, leveraging Kova’s expertise and Hadron’s capacity. Next Insurance has raised $265 million from Allianz X to enhance its digital insurance offerings for small businesses. The funding will help expand its product range, improve its platform, and strengthen its reinsurance ties with Allianz. The collaboration with Allstate aims to offer commercial auto products and broaden access to Next’s digital insurance solutions for underserved small businesses in the U.S. Rokstone has entered into a three-year binding authority agreement with Aviva, enhancing its capacity to underwrite property risks. This partnership enables Rokstone to offer more comprehensive property insurance solutions, leveraging Aviva’s financial strength and underwriting expertise. Westfield Specialty International has received approval from Lloyd’s for a £774 million business forecast for its syndicate operations in 2025. This approval enables Westfield to expand its underwriting capacity within the Lloyd’s market, focusing on specialty insurance lines. The strategic move aligns with Westfield’s goal to enhance its presence in the global specialty insurance sector, building upon its acquisition of Lloyd’s Syndicate 1200 from Argo Group in early 2023. SageSure has partnered with Auros, a newly established reciprocal exchange. This collaboration aims to provide homeowners in coastal states with tailored insurance solutions, leveraging SageSure’s underwriting expertise and Auros’s reciprocal structure to offer policyholders both coverage and a stake in the exchange’s governance. |
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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! |