{"id":1001,"date":"2023-05-07T12:00:32","date_gmt":"2023-05-07T16:00:32","guid":{"rendered":"https:\/\/www.wikifri.com\/?p=1001"},"modified":"2023-05-06T14:21:45","modified_gmt":"2023-05-06T18:21:45","slug":"3-things-05062023","status":"publish","type":"post","link":"https:\/\/www.wikifri.com\/3-things-05062023\/","title":{"rendered":"3 Things – Root & Lemonade, AIG Focus & Insurtech Funding Trends"},"content":{"rendered":"

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Hello Friends!\u00a0 It was another busy week of earnings reports and other news.\u00a0 This week we are following Root & Lemonade running out of time, AIG focusing, other carrier results and Insurtech funding trends.\u00a0 Here are the three things we learned:<\/p>\n<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<\/div>\n

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Root & Lemonade Running Out of Time<\/strong><\/p>\n

Two of the most notable public insurtechs\u00a0Root<\/a><\/strong>\u00a0&\u00a0Lemonade<\/a><\/strong>\u00a0reported Q1 2023 earnings this week.\u00a0 Both stocks enjoyed a rally on the narrative that they were taking steps to controlling their loss ratios.\u00a0 If that trend continues it will help investors recoup losses.\u00a0 Root’s CEO is certainly eager to get cash out of the company.\u00a0 He will receive a large payment according to the\u00a0proxy statement<\/strong><\/a>\u00a0filed despite the lack of profitable results and dismal shareholder returns.\u00a0 Root is trimming their book and cutting costs hoping to survive but it is starting to appear they may run out of cash before they can make any meaningful progress towards profitability.\u00a0 Current cash stands at $523.6 million outside of regulated entities.\u00a0 Inflation and costly distribution channels limit their ability to control costs and debt covenants limit the amount they can spend.\u00a0 Lemonade is growing their customer base, adding 48,000 over the quarter, an increase of 23% over the prior quarter.\u00a0 In-force premium stands at $653 million but their average premium, though increasing, is still only $352 per insured.\u00a0 With just under $1 billion of cash and a stubbornly high loss ratio, it is possible to see a future where they too will run out of money.\u00a0 They continue to have to keep a large marketing spend to power this growth and with inflation staying high, they can only increase rates so much to try to drive towards profitability.\u00a0 Just look at two of the companies they were hoping to disrupt,\u00a0Allstate<\/a><\/strong>\u00a0posts a combined ratio of 18.6 and\u00a0Progressive<\/a><\/strong>\u00a0is pulling back their spend to control a combined ratio that is above their target of 96%.<\/p>\n<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<\/div>\n

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AIG Focus & Others Carrier Result<\/strong>s<\/p>\n

AIG continues to sharpen their focus and divest of businesses that are not part of their core insurance focus.\u00a0 They announced this week that they have struck a deal with\u00a0American Financial Group (Great American) to acquire their crop insurance division<\/a><\/strong>.\u00a0 \u00a0Crop insurance, like Flood, is backed by the Federal Gov’t and normally a profitable business with lower risk exposure than typical commercial and specialty lines.\u00a0 AIG has viewed the operation as not core to their go-forward strategy and AFG is fortunate to acquire the business that will increase their crop insurance premium written to $1.8 billion, keeping them the 5th-largest writer and largest U.S.-owned participant in the multi-peril program.\u00a0\u00a0AIG reported results<\/a>\u00a0<\/strong>this week highlighted by $502 million of underwriting income, a record in Q1 underwriting results in their history.\u00a0 CEO Peter Zaffino said the results demonstrate their strategy of focus and continued efforts turning around P&C operations to evolve its business model and move away from its conglomerate structure.\u00a0\u00a0CNA reported increases in net income<\/a><\/strong>\u00a0and core income and a slightly increased combined ratio from 91.9% to 93.9% showing commercial lines strength.\u00a0\u00a0Everest Re was powered by their reinsurance division<\/a><\/strong>\u00a0who achieved record quarterly premiums increasing by almost 20% in year-over-year comparison showing the rate increases taken by reinsurers in the recent renewal cycle.<\/p>\n<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<\/div>\n

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Insurtech Funding Recovers<\/strong><\/p>\n

Gallagher Re reports in their\u00a0quarterly InsurTech report<\/a><\/strong>\u00a0that funding has increased 37.6% quarter-over-quarter from $1.01 billion in Q4 2022 to $1.39 billion in Q1 2023.\u00a0 The largest percentage of all funding deals were in the ‘early stage’ category, showing that mid-to-late stage rounds are still harder to raise.\u00a0 This would enforce the idea that the trend for InsurTech investment will be focused on entities who are adding value to incumbent business models and will come from private sources, not IPOs.\u00a0 To raise money in this new paradigm companies need a focused solution that can turn value creation into profits in a short time and does not depend on the promise of disruption.\u00a0 Agency management technology provider, Novidea was able to raise a\u00a0Series C round of $50 million<\/a><\/strong>. \u00a0The company has raised $90 million to date and will use the funds to further develop its cloud-based, data-driven insurance platform that helps insurance agents, brokers and MGAs provide better customer experience.\u00a0 Technologies that enable the distribution channel to create better customer experience and less friction appear to be attracting investment.<\/p>\n<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<\/div>\n

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Thank you for following us, we appreciate your feedback and continued support. \u00a0Stay productive, stay safe and stay in touch!<\/p>\n<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Hello Friends!\u00a0 It was another busy week of earnings reports and other news.\u00a0 This<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1],"tags":[],"acf":[],"yoast_head":"\n3 Things - Root & Lemonade, AIG Focus & Insurtech Funding Trends - Wikifri<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wikifri.com\/3-things-05062023\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"3 Things - Root & Lemonade, AIG Focus & Insurtech Funding Trends - Wikifri\" \/>\n<meta property=\"og:description\" content=\"Hello Friends!\u00a0 It was another busy week of earnings reports and other news.\u00a0 This\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.wikifri.com\/3-things-05062023\/\" \/>\n<meta property=\"og:site_name\" content=\"Wikifri\" \/>\n<meta property=\"article:published_time\" content=\"2023-05-07T16:00:32+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-05-06T18:21:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.wikifri.com\/wp-content\/uploads\/2021\/04\/Three-Things-300x157.png\" \/>\n<meta name=\"author\" content=\"Nick Coenen\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Nick Coenen\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.wikifri.com\/3-things-05062023\/\",\"url\":\"https:\/\/www.wikifri.com\/3-things-05062023\/\",\"name\":\"3 Things - 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