3 Things – Deals, Frozen Lemonade & Customer Acquisition – 5/15/2021

Hi All!  This week in insurance we are following results dealmaking, frozen lemonade and the power of customer acquisition.  Here are the three things we learned this week:


Dealmaking Continues

Perhaps the biggest deal headline this week was from Aon/Willis with the announcement that the Willis’ reinsurance business will be sold to AJ Gallagher for $3.57B.  This move will satisfy anti-trust regulators and likely clear the way for approval while Gallagher receives a key benefit.  Late last week, AIG announced they will IPO their life unit as opposed to an outright sale that had been rumored.  After a strong quarter it seems Peter Zaffino and the Board must feel they can receive a better valuation from going public than from an asset sale and that makes sense, there is value and opportunity for the life business to grow.


Frozen Lemonade

The effects of the Texas Freeze event have shown up in most of the earnings reports from carriers this season.  It dented profits for many but for Lemonade a big spike in loss ratio when they experienced ‘about a year’s worth of claims in its first few days’.  The reinsurance quota share arrangement they have did not protect them as it is designed to provide surplus relief, not provide cover for a large loss event.


The Power of Customer Acquisition

Accelerent Holdings, a traditional source of insurance capital, makes a liquid investment and will provide insurance capacity to Leap, a provider of lease insurance.  Leap has a customer base of 750,000 homes and they plan to develop new products for that audience.  This highlights a trend where we see insurance capital being used to acquire customers through an equity position and not the typical high customer acquisition cost that raises their expense ratio.

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