Hello Friends!  As we pay tribute to the bravery and service of our Veterans this week, the insurance sector marches on with the usual level of news and announcements. Deal-making accelerates as we edge closer to the year’s end, earnings reports continue to pour in, and innovators in the industry press forward with strategic initiatives. The pace of insurance never relents, so let’s dive into the three things we learned from this past week.

 [1]

M&A and IPO Frenzy as Year-End Nears

Deal-making kicks into high gear with the end of 2023 approaching fast.  Zurich unit Farmer’s acquires three brokerage entities of the flood servicing arm to add capital-light earnings streams, a move that signals it is looking to diversify away from the troubled personal lines segment.  Zurich reported a strong close of the first 9 months of 2023 with 8% GWP growth and looks to be on the path to achieving their 2023-2025 financial goals.

James River made a deal with Fleming Re to purchase their casualty reinsurance business for the equivalent of 0.75 times their book value.  Signaling later in the week the beginning of a comprehensive strategic review, signaling potential company-wide changes on the horizon.

DOXA Insurance Holdings, a valuable MGA platform, was traded to a new private equity investor Goldman Sachs, demonstrating another marquee financial brand investing in insurance.  Gallagher acquired another bank-owned brokerage unit.

Other updates, Argo announced they were pushing the close of their acquisition by Brookfield back to the 2nd quarter of 2024.  This coupled with their improved financials suggest a cautious yet optimistic future.  Tiptree officially filed the S-1 to initiate the IPO of Fortegra.  Hippo CEO Rick McCathron comments on the rumors of them selling their fronting operation Spinnaker Insurance.

 [2]

This Week’s Q3 2023 Earnings Landscape

Once again we navigate through a dynamic landscape of earnings announcements.  Liberty Mutual emerged from a previous year’s loss to a $219 million net income in Q3 2023, despite their U.S. retail markets segment facing increased pretax operating losses and catastrophe losses. Meanwhile, SiriusPoint Ltd. celebrated a historic quarter with a combined ratio of 88%, signaling robust underwriting profit and a strong positive outlook from CEO Scott Egan.  Ambac Financial Group, reported that Everspan produced its first quarterly pre-tax profit, with ambitious targets set for gross written premiums in the coming year.

Berkshire Hathaway’s insurance operations saw a staggering increase in pretax earnings, with significant contributions from GEICO, which alone reported a $1 billion profit for Q3. Skyward Specialty Insurance Group reported impressive growth with a 31.6% increase in gross written premiums and a standout combined ratio of 90.2%, underscoring their successful underwriting results. On the expansion front, Skyward Specialty bolstered its Surety division with seven strategic new hires.

In the realm of financial services, Corebridge Financial Inc. announced a decline in net income but marked progress toward focusing on the U.S. market, including the sale of its U.K. protection business to Aviva plc and Irish health insurer Laya Healthcare to Axa S.A. Finally, AIG priced a secondary offering of Corebridge Financial stock, aiming to raise approximately $1.0 billion, showcasing the fluidity and strategic financial movements within the sector.

 [3]

Insurance Innovators Forge Ahead

The insurance industry continues to evolve with new milestones and strategic shifts. Lemonade, announced they have surpassed 2 million active customers, achieving this milestone 35% faster than their first million but also increased premium per customer by approximately 70%, trying to assure investors and paint a clear path to profitability.  Meanwhile, the company has positioned itself for future financing opportunities with a shelf registration statement with the SEC.

MassMutual is set to shut down Haven Life by year-end, a direct-to-consumer agency offering term life insurance, while Hiscox reorganizes, cutting 42 positions amid a competitive U.S. market. Nationwide sets a new standard in customer experience, joining forces with Rivian to integrate insurance into the vehicle purchase process through a digital insurance platform.

United Risk emerges under Applied Underwriters, with industry veteran Dan Malloy at the helm, aiming to consolidate and grow its MGA and MGU businesses. Allstate introduces new app features enhancing customer value and interaction, from a gas finder to weather risk resources.

Lastly, Futuristic Underwriters launches as a tech-driven MGA for commercial P&C insurance, looking to combat rising premiums and inefficiencies with AI and advanced technology, fostering a new era for the industry’s approach to underwriting and risk management.

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!