News
Swiss Re P&C result shows hard market improvements as renewal rates soar
Higher rates and pricing at the reinsurance renewals this year are just part of the equation for Swiss Re, perhaps more important are the adjustments to attachment points and terms and conditions, as the company has avoided too much impact from what was a very costly second-quarter in the United States as well.
Overall, Swiss Re has reported very strong net income of US $1.447 billion for the first-half, significantly up on the prior year’s US $157 million.
In P&C reinsurance, the net income result reached $904 million for H1 2023, well up again on the previous year’s $316 million.
That has been helped by a combined ratio that fell to 94.7%, down on the H1 2022 figure of 98.5%.
At the same time, the reinsurance firm continued to expand, with net premiums written increasing 4.4% to US $22.1 billion in the first-half of 2023.
Swiss Re’s Group Chief Executive Officer Christian Mumenthaler explained, “The overall result in the first half of 2023 reflects the good positioning of Swiss Re, as well as the quality of our new business. The performance of P&C Re and Corporate Solutions contributed to a solid second quarter.”
Berkshire profits rebound as insurance earnings, stocks surge
Following news of landmark profits by Berkshire Hathaway, GEICO’s parent company, stocks jumped Monday morning to near record highs.
According to the Associated Press, Berkshire Hathaway said Saturday that its profits surged to hit $24,755 per Class A share. A year ago, the company recorded a loss of $43.6 billion, or $29,633 per Class A share, when the value of its biggest investments fell.
However, Berkshire Chairman Warren Buffett tells investors to watch operating earnings to see how the more than 90 companies his company owns are actually doing, the AP reports.
By that measure, Berkshire’s operating earnings grew 6.6%, to more than $10 billion, or $6,928.40 per Class A share. That’s up from $9.4 billion, or $6,403.61 per Class A share, in 2022.
In March, Berkshire reported that GEICO had lost nearly $1.2 billion in currency losses and, specifically in car insurance, experienced its sixth straight underwriting loss despite increasing premiums.
In its Q1 results, Berkshire said that GEICO’s average auto policy premiums were higher, effectively increasing profit by $72 million “as average premiums per auto policy increased 15.2% due to rate increases, offset by a decrease in policies-in-force of 2.4 million (13%) since March 31, 2022.”
Massive Citizens Takeout Plan Seen as Sign That Things Are Looking Up in Florida Market
Stakeholders near and far are hailing a near-record number of takeouts from Citizens’ Property Insurance Corp. as a sign that the troubled Florida insurance market is improving, even if it will likely mean higher premiums for homeowners.
“This is what happens when you have real insurance reform,” Louisiana insurance defense attorney Matthew Monson wrote on his Linkedin page last week.
He argued that after Florida lawmakers in the last two years approved major reform measures that limited one-way attorney fees and assignment-of-benefits agreements, insurance companies are now showing a willingness to invest in the state, and he urged Louisiana lawmakers to adopt “Florida style” reform.
Monson was speaking specifically about Tampa-based Slide Insurance Co., which the Florida Office of Insurance Regulation approved to offer takeouts to as many as 100,000 Citizens policyholders – far more than any other carrier. Safepoint Insurance was approved for another 30,000; followed by Southern Oak, with 25,000; Florida Peninsula, with 19,000; and Monarch National with 10,000.
Altogether, that’s 184,000 policies that could be removed from Citizens, the state-created insurer of last resort that has ballooned to become Florida’s largest property insurer, with more than 1.3 million policies in force this year.
Premiums are up, but at what cost?
As we were closing the August 2023 issue of NU Property & Casualty magazine, local news reports in my town highlighted several stories about dramatically higher homeowners and condo insurance premiums.
In one case, a condominium development where residents survived the brutal Marshall Fire in 2021 and are just beginning to rebuild, faced a situation in which their insurer refused to renew, forcing the association to piecemeal together coverage from several carriers and pay premiums that are 400% higher than the cost of their previous coverage.
That story mirrors a situation in California that we covered on PropertyCasualty360.com earlier this year. We wrote about steps leaders in that state are taking to try and curb skyrocketing condo insurance rates.
Here’s how California Insurance Commissioner Ricardo Lara characterized the problem in a February letter to state legislators: “Homeowners association communities and residents of condominium developments in wildland-urban interface areas of the state are facing particular difficulty accessing coverage because of the high concentration of risk. Constituents have reported special assessments of thousands of dollars per year, and in some cases, premiums of nearly $1,000 per unit, per month just to maintain the master policy of their housing development. This is an untenable situation, potentially affecting millions of California homeowners.”
Kemper Announces Exit from Preferred Home and Auto Business
Kemper is exiting the preferred home and auto insurance market, sold through its Kemper Personal Insurance brand, with business reductions beginning immediately.
All policies will be non-renewed or canceled in accordance with individual state regulations, according to an announcement released ahead of the company’s second-quarter earnings call on Monday.
“The decision to exit the business was made after thoughtful evaluation of our options and considered the most effective and efficient way to support our stakeholders,” said CEO Joseph Lacher. “It enables us to release capital and increase the resources available to support our core specialty auto and life businesses.”
The company’s preferred property and casualty business includes eight underwriting companies, which comprise approximately $500mn of written premium.
InsurTech/M&A/Finance💰/Collaboration
insurtech funding at a 5-year low - CB Insights
Insurtech’s bounce-back in the first quarter of 2023 was short-lived.
After spiking to $1.4B in Q1’23, insurtech funding fell 36% QoQ in Q2’23, slipping below $1B for the first time since 2018. That funding decline places insurtech between fintech (-48% QoQ) and the overall VC market (-13% QoQ).
Quarterly insurtech deal count also tumbled below 100 — a first since 2017.
Investors Double-Down on Cyber Insurtech Resilience With $100M Series D Round
Investors in cyber risk solution company Resilience have contributed again – $100 million in a series D equity financing round – a testament to the company’s business model and results, its leaders said.
With reports of a decline in investment funding for insurtechs, and other news of layoffs or dwindling capacity, Resilience co-founder and CEO Vishaal Hariprasad told Insurance Journal that this level of commitment from the company’s investors “is a great signal” of their confidence.
The Series D round was led by Intact Ventures, an affiliate of Resilience’s primary capacity provider, Intact Insurance’s underwriting companies, with participation by Lightspeed Venture Partners as well as General Catalyst and Founders Fund. All have previously invested in the company, which has now raised over $225 million.
Hariprasad said the doubling down by Intact “speaks volumes to their belief in our results at an insurance technical level,” and will provide capacity.
“I see many times we’re reading about capacity drying up for [managing general agents] or others, and that is not the case in this scenario,” Hariprasad added. At the same time, the investment by Lightspeed – a founding investor in Resilience during its Series A round – is a nod that Resilience can resonate with the mid- and large-enterprise base.
Vesttoo in talks with investors over fake collateral scandal
Vesttoo Ltd. is in “active discussions” with potential investors to find alternative collateral for clients after discovering fake letters of credit had been used on its platform, a company spokesperson said on Monday.
Vesttoo, which uses artificial intelligence technology to connect the insurance industry and capital markets, is also in contact with regulatory bodies worldwide, the spokesperson said in an emailed statement.
FloodFlash announce partnership with Hiscox
FloodFlash, the first insurance technology company to offer sensor-enabled parametric flood insurance, has today announced a new partnership with Hiscox.
Hiscox is already an active participant in the US flood insurance market, and as a capacity provider for FloodFlash will support the market appetite for parametric as an efficient option for catastrophe covers. They join Munich Re, whose parametric expertise Hiscox will complement with market-leading knowledge of launching successful flood products in the US.
Despite the prevalence of flood risk in America, it plays host to the largest flood protection gap in the world. FloodFlash is now available across every state.
In the UK where the business initially launched, FloodFlash has set new records for the fastest property flood claim payout, thanks to the proprietary IoT sensor technology. In November 2022 they paid one client in full less than four hours after they flooded. These rapid claims provide a lifeline to businesses that often have no other options for affordable and comprehensive coverage.
FloodFlash Head of Major Accounts and Capacity Management Richard Coyle comments: "We're delighted to bolster our US capacity with a carrier that has such expertise in the US flood market. This new partnership with Hiscox represents another key endorsement of the FloodFlash approach and, in addition to Munich Re, we have the ideal carrier team supporting us as a parametric flood insurance provider. In response to extraordinary demand since our launch in January, this additional fresh capacity will enable us to continue providing compelling coverage options for distressed businesses that may otherwise be faced with retaining uncomfortable levels of flood risk."
Insurtech Startup Functional Finance Raises $8 Million to Further Expand Operational Efficiency for the Insurance Industry
Functional Finance, a software platform that integrates and automates data and reporting functions for insurance companies, announced today that it has secured $8 million in seed capital, plus $2 million in SAFE notes for future equity investments, which will go towards product development and client relationships. The fundraising round was led by venture capital and growth equity firms New Enterprise Associates, Inc. (NEA), Walkabout Ventures and Altai Ventures, with participation from industry titan Hank Greenberg's C.V. Starr Insurance and other premier investors.
Rashmi "Rush" Melgiri– a two-time insurtech entrepreneur – and seasoned technology executive Tony DeGangi co-founded Functional Finance in 2021. Their mission is to resolve the convoluted operational processes found throughout the insurance sector following years of experience dealing with insurance technology issues firsthand. CEO Melgiri previously co-founded CoverWallet and is joined by CoverWallet's former president Jim Ermilio, who now serves as Functional Finance's President. DeGangi, Functional Finance's CTO, was previously the co-founder and CTO at Renew.com, an online Medicare brokerage platform.
Functional Finance's technology easily integrates within the finance tech stack of corporate partners to offer billing/invoicing, premium collection, financing, reconciliation, payables processing, reporting and integration back to the general ledger. The platform provides an automated, seamless connection that offers total visibility at a policy or account level.
"At my last startup I realized firsthand that spreadsheets and emails are terribly inefficient, error-prone and costly ways for the insurance industry to manage their payables and receivables," said Melgiri, CEO of Functional Finance. "You can build fast-growing businesses and take payments online but reconciling that on the back end is often overlooked and deprioritized, leaving it to intensive manual labor. There was a tremendous opportunity to create an automated technology solution that will make the industry move faster, and the experience should be more efficient and positive for clients and customers."
Commentary/Opinion
How AI is changing what work looks like in the insurance industry - WTW
With applications of artificial intelligence technology spreading throughout the insurance industry, fresh approaches to job design, talent acquisition and training are needed to take full advantage.
Cost containment or reduction is a constant challenge for insurers, particularly in light of recent inflationary pressures. Innovation is key to unlocking unmet markets and better meeting customer demands economically – not only in how carriers use emerging technology, such as AI, but in who (or what) does the work in a hot talent market where certain skills are in high demand.
Already we see many insurers moving toward more digital business models to position themselves for future success. And whether through deploying advanced technologies, creating an enhanced customer experience, or delivering transparent communications around key topics such as the use of AI in their businesses, key work and talent strategies are essential accompaniments and drivers of success.
People
Zendrive announces new leadership formation to accelerate
President Dennis Ellis steps into CEO role; Co-Founder and CEO Pankaj Risbood reprises role as CTO
Zendrive, a leading Mobility Risk Intelligence (MRI) provider with a mission to make roads safer with data and analytics, today announced that President Dennis Ellis has been appointed Chief Executive Officer (CEO) of the fast-growing company. Co-Founder and former CEO Pankaj Risbood will reprise his role as Chief Technology Officer (CTO).
Risbood led Zendrive as CEO and drove significant advancements, forging strong relationships with major US insurers and expanding Zendrive’s technology to tens of millions of users through its proprietary IQL publisher network.
With a passion tied to working closely with technology and a resurging interest in leveraging new solutions to tackle road safety issues, Risbood has made the decision to return to his role as CTO and nominated Zendrive President, Dennis Ellis, for the CEO role. Since joining Zendrive, Ellis has made remarkable contributions to Zendrive’s success by defining the company’s go-to-market strategy, cultivating cross-industry partnerships, and scaling IQL beyond 50 million users.