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Hi Friends! It’s Thanksgiving week, and hopefully, everyone can take a much-deserved break from the frenetic pace of insurance. This week, there was still plenty of activity, including insurtechs announcing significant capital raises showing different approaches and product launches that continue to follow the themes of weather-related innovations along with targeting niche risk segments. Investment in third-party capital and ILS opportunities is driven by stability and the potential for capital growth offering opportunities for (re)insurers. State Farm, Allstate and Progressive all demonstrate growth despite the ongoing challenges present in their businesses. So, let’s dive in again and explore the three things we learned this week. |
Capital Raises, Product Launches Favor Weather Innovation and Niche RisksInsurtech stalwarts revealed two notable capital raises, but they offer different themes. One involved investors investing more to help with scale and growth, while the other involved debt to strengthen their balance sheet, giving up a piece of the equity pie. Meanwhile, product launches continue targeting weather innovation and niche risk solutions. Federato announced a $40 million Series C round and has now raised $80 million. With the new funding, Federato will expand its RiskOps platform globally, driving broader AI adoption and innovation in the insurance industry. They claim their clients have reported significant results, such as a 90% increase in quote speed and a 50-90% reduction in systems used by underwriters. bolttech has secured a venture debt facility of up to $50 million from HSBC, marking a new approach to their growth trajectory. This funding will bolster bolttech’s balance sheet and support its expansion plans, particularly in developing its proprietary technology and enhancing digital capabilities for partners and customers. To date, bolttech has raised a significant amount of capital, and this pivot to debt financing could be viewed as a bridge to stabilize their finances. Aon continues to innovate by launching two cutting-edge tools designed to address evolving risks. The Florida Flood v3.0, developed in collaboration with Fathom, provides state insurers with an advanced flood model to assess exposures from tropical and non-tropical weather systems, including storm surge, inland flooding, and flash floods. Additionally, Aon has unveiled the Cyber Risk Analyzer, a digital platform enabling organizations to effectively assess and mitigate cyber risks. These innovations reflect Aon’s commitment to equipping clients with sophisticated solutions for complex risk landscapes. Skyward Specialty Insurance has introduced a Life Sciences Liability insurance product through its Healthcare Solutions underwriting unit. This offering provides tailored coverage for the complex risks inherent in the life sciences sector, including product liability and professional errors and omissions. The product combines expert underwriting with in-house claims management to address a broad spectrum of potential issues, aiming to support innovation and growth within the life sciences industry. Hamilton Global Specialty, a division of Hamilton Insurance, is set to launch a U.S. excess and surplus lines property insurance business through its managing general agency. The new leader, Lissie Van Leunen, is assembling a team and developing a portfolio targeting commercial E&S lines risks, with plans to introduce products ahead of a January 1, 2025, launch. |
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Third-Party Capital and ILS Opportunities Continue(Re)Insurers continue to take advantage of investors’ appetite to invest in stability and growth opportunities with third-party capital and ILS platforms. Recent moves by players like Greenlight Re and RenaissanceRe highlight how this trend shapes the industry’s future, enabling them to grow their capital base and respond to increasing demand for innovative risk management solutions. Greenlight Re, is exploring opportunities to collaborate with third-party capital and insurance-linked securities (ILS) investors. This strategic move aims to enhance the company’s underwriting capacity and diversify its risk portfolio. By partnering with external capital providers, Greenlight Re seeks to leverage additional resources to support its reinsurance operations, potentially leading to more robust financial performance and a stronger market position. RenaissanceRe has reported a significant increase in its third-party capital, reaching $7.72 billion as of September 30, 2024. This marks an almost $1 billion year-over-year growth, underscoring the company’s strong position in managing assets within the insurance-linked securities (ILS) market. The expansion reflects RenaissanceRe’s strategic efforts to enhance its capital base and underscores the growing investor confidence in the firm’s reinsurance and ILS offerings. |
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State Farm and Allstate Showcase Resilience While Growth ContinuesIn the face of challenging market conditions, insurers like State Farm, Allstate, and Progressive continue demonstrating their ability to navigate adversity while maintaining growth. Tesla, with its expanding embedded insurance offerings, is also becoming a notable player, showcasing how innovation can support progress, but profitability looks to be challenging. State Farm exemplifies resilience, reporting a significant reduction in underwriting losses compared to the previous year. For Q3 2024, the group posted a net underwriting loss of $4 billion, bringing the year-to-date total to $8.3 billion—an improvement over the $12.5 billion loss during the same period in 2023. This progress was further supported by an 18% increase in written premiums, totaling $48.8 billion, underlining State Farm’s strong capital base and operational stability. Allstate has faced its own challenges, with catastrophe losses for October 2024 reaching $237 million and contributing to year-to-date losses of $4.84 billion. Despite these pressures, Allstate achieved a net income of $1.2 billion in Q3 2024, highlighting its ability to manage substantial claims while maintaining financial health. Progressive continues its growth trajectory, reporting a combined ratio of 94.1% for October 2024 and a year-to-date net income of $6.5 billion. The insurer’s policy count surged to 34.36 million, a 16% year-over-year increase, driven by the addition of nearly half a million new policies in October alone. Despite losses from hurricanes Milton and Helene, Progressive has reinforced its market position with robust underwriting practices and customer growth. Tesla’s insurance operation is also making waves, with impressive growth in written premiums across its carriers. Tesla General Insurance recorded a 94% year-over-year premium increase for Q3, while Tesla Property & Casualty saw a 144% rise. Although Tesla Insurance reported underwriting losses, the rapid expansion of its embedded offerings demonstrates the automaker’s commitment to integrating insurance solutions into its broader ecosystem, positioning itself as a significant player in the OEM insurance market. |
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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! |