News
CCC Intelligent Solutions Holdings Inc. Reports Double-Digit Revenue Growth and Robust EBITDA
- Revenue Growth: FY 2023 total revenue increased by 11% to $866.4 million.
- Profitability: Adjusted EBITDA grew by 16% to $353.4 million for the full year.
- Margin Improvement: Full-year adjusted gross profit margin improved to 78%.
- Net Income: GAAP net loss was $90.1 million for FY 2023, while adjusted net income rose to $210.5 million.
- Free Cash Flow: Free cash flow increased to $195.0 million, up from $152.0 million in the previous year. -Debt Position: Total debt stood at $784.0 million with cash and cash equivalents of $195.6 million as of December 31, 2023.
Lemonade Inc (LMND) Reports Strong Q4 2023 Earnings with Significant Improvements in ...
- In-force Premium (IFP): Grew by 20% year-over-year to $747 million.
- Revenue: Increased by 31% compared to the same quarter last year.
- Gross Profit: Climbed 165% year-over-year with Gross Profit Margin more than doubling to 29%.
- Operating Expense: Decreased by 5% year-over-year, indicating improved efficiency.
- Net Loss: Improved by 33% year-over-year, showing progress towards profitability.
- Adjusted EBITDA: Loss improved by 44% compared to the same period last year.
- Outlook: Lemonade Inc (NYSE:LMND) expects accelerating growth and an improving bottom line in 2024.
Lemonade Inc (NYSE:LMND), a trailblazer in the insurance industry with its digital and AI-driven platform, released its 8-K filing on February 27, 2024, showcasing a robust fourth quarter for 2023 and a positive outlook for the future. The company, which operates across multiple states including California, Texas, and New York, has reported significant year-over-year growth in key financial metrics, reflecting its strategic focus on profitability and operational efficiency.
Lemonade Inc has demonstrated a strong performance in the fourth quarter, with a 20% increase in IFP and a 31% rise in revenue compared to the previous year. The company's gross profit soared by 165%, and the gross profit margin more than doubled to 29%. These achievements underscore the company's ability to scale its business while improving its underwriting efficiency and cost management.
Despite these gains, Lemonade Inc acknowledges the inherent challenges in the insurance industry, such as seasonality and catastrophic events that can affect loss ratios. The company's gross loss ratio improved by 12 points year-over-year, but management cautions that fluctuations are expected due to seasonal trends and unpredictable events.
Apple cancels decade-long electric car project, source says
Apple (AAPL.O), opens new tab has canceled work on its electric car, a source familiar with the matter told Reuters on Tuesday, a decade after the iPhone maker kicked off the project. The move draws the curtain on a plan that would have helped Apple break out into a new industry and potentially replicate the success of the iPhone.
The project had seen uneven progress throughout its life and its end comes as global automakers cut back their investments in electric vehicles, whose demand has dropped significantly.
As insurers increase rates, more policyholders shop for new plans
About 41% of all insured households shopped for insurance at least once in 2023, as consumers carried the weight of insurers’ rate increases, according to data found in a LexisNexis Insurance Demand Meter report.
“With such a significant drop in a very short time, insurers may want to take heed of retention strategies, including more proactive and selective monitoring of their renewal book to identify and retain the most profitable policyholders,” the report said. “While retention will likely stabilize, the industry hasn’t witnessed a drop this significant in recent years.”
A Q1 2024 Insurance Personal Lines Trends and Perspectives report from TransUnion predicts shopping trends will continue to remain high in 2024.
That’s Gonna Leave a Mark: Large-Hail Days Hit Two-Decade High in 2023
Hail of two inches or greater struck the United States on 141 days last year — the highest number of annual days in two decades, according to a new CoreLogic report.
Severe convective storms generated “an unprecedented amount of insured loss on par with a single major hurricane” in 2023, CoreLogic shared in a press release. The main driver of insured losses was hail, the release said, because unlike tornadoes and straight-line winds, hailstorms are frequent, highly damaging and affect large portions of the country during a single storm.
“The degree to which 2023 was an outlier compared to history is seen in the number of single- and multifamily residential properties affected by hail,” the report said. “Hail of at least one inch fell on over 10 million single- and multifamily homes in the contiguous U.S. from mid-March through November 2023.”
That estimate does not account for homes impacted multiple times. More than half of homes impacted by hail of at least 1 inch or greater were in Texas, Colorado, Illinois, Oklahoma and Missouri.
AI in Insurance
Digital Overhaul in Insurance Benefits Firms Already Using AI
In the artificial intelligence (AI) race, some companies, and sectors, are starting on third base.
That’s because companies operating in technologically sophisticated sectors with deep libraries of operating data frequently already have the infrastructure, the employee talent and resource allotment framework in place to leverage the innovations most effectively and faster than the rest of the market.
The insurance industry is one of those sectors.
After all, InsurTech startups and incumbents alike are no stranger to either AI or digital transformation.
And that familiarity is paying off.
Githesh Ramamurthy, chairman and CEO of CCC Intelligent Solutions, told investors on the company’s Wednesday’s (Feb. 28) fourth quarter and full fiscal year 2023 earnings call that there has been a “significant change” in the “accelerating demand for AI solutions” from CCC’s customers and clients.
Automating away highly manual paper-based processes, reducing cycle times, and minimizing administrative loss are all key opportunity areas within insurance.
Earlier this month (Feb. 15), Michael Boeke, VP of payment product management enterprise at CCC, told PYMNTS that the trillion-dollar property and casualty economy needs to continue its digital overhaul.
Echoing that sentiment, executives on the call highlighted CCC’s ability during the fiscal year 2023 to process a record number of U.S. auto insurance claims using AI-enabled solutions, emphasizing the company’s commitment to innovation and operational excellence around integrating AI into existing workflows.
“Like every other solution we deliver, AI solutions also have to deliver ROI,” Ramamurthy added. “But customers continue to be more and more interested … and the scale of the feedback loop and the quality of the data has allowed us to improve quality substantially.”
Telematics, Driving & Insurance
Challenges Facing Tesla Insurance
Despite the impressive technology at Tesla's disposal, the road ahead for its insurance operation is fraught with difficulty.
In the ever-evolving landscape of the automotive industry, Tesla has carved out a unique niche not only as an electric vehicle (EV) manufacturer but also as a disruptive force in areas such as autonomous driving and energy solutions. With their sights set on revolutionizing the insurance industry, Tesla Insurance aims to leverage their technological prowess to offer innovative and personalized coverage. However, despite the impressive technology at their disposal, the road ahead for Tesla Insurance is fraught with challenges.
Neeraj Kaushik, principal consultant, is a product manager for the NGIN platform initiative at Infosys McCamish Systems.
Commentary/Opinion
Does the P&C Insurance Cycle No Longer Exist?
The hard market/soft market cycle has reigned for decades, but COVID shocks and a host of new technologies may be ending it.
Today’s world is confusing, replete with mixed and conflicting signals. Reports of low unemployment and high inflation have muddied forecasting for a recovery or a looming recession and leaves us unsure of what to expect: traditional economic cycles or permanent change. Either way, such signals foster uncertainty and test our objectivity on a daily and even hourly basis.
The P&C insurance market is displaying its own mixed signals, making it difficult for insurance business leaders to plan and adjust, not to mention the tremendous disruption to agents and customers. Large and persistent rate increases contrast with the most recent improvements in combined ratios and net income. Tighter underwriting actions and lack of insurance availability is creating challenges in navigating the complex landscape by all stakeholders.
The Insurance Clock
Back to the question: cycle or permanent change? Despite P&C’s desired state of steady, profitable growth, the reality is a constant tension and cycle of writing new business followed by turning the dials for profitability. In just the last 25 years, major shockwaves from 9/11 terror attacks, wars and the housing and financial market collapse have tested industry cycles, yet the clock still ticks ahead, perhaps with more elongated recoveries after these shockwaves. Read On
Alan Demers and Stephen Applebaum as published in Insurance Thought Leadership
"Worst insurance crisis in history"
Louisiana’s newly appointed insurance commissioner has voiced serious concern over the state’s persistent challenge in offering affordable insurance coverage, highlighting the need for legislative measures to attract more insurance providers to the region.
Appointed earlier this year, ex-insurance executive Tim Temple shared his insights with a state legislative committee on Tuesday, emphasizing the gravity of the insurance predicament facing Louisiana.
“Louisiana is experiencing the worst insurance crisis in its history,” Temple remarked. He further elaborated on the financial strain it places on residents, noting, “The average citizen in Louisiana spends more of their paycheck buying insurance than other states, so that’s the crisis that we’re facing.”
The situation worsened following the hurricanes of 2020 and 2021, leading to the financial collapse of several insurers and the exit of others from the state’s market. Access Home Insurance, Americas Insurance, FedNat Insurance, Gulfstream Property and Casualty, Lighthouse Excalibur, Southern Fidelity, State National Fire Insurance and Weston Property & Casualty and many others have recently closed their doors in Louisiana
Privacy and tracking claims are likely to reach a tipping point
Privacy will be a continued and exacerbated theme for 2024, particularly in the US, where more privacy and tracking claims are anticipated.
This is less of a global issue for now, but we continue to track developments in other jurisdictions where class action mechanisms are in place; for example, we have seen an increase in data privacy class actions in Australia. Fortunately, most other global markets are still protected from mass litigation and class action litigation thanks to “loser pays” rules and a general reluctance of the courts to open the floodgates to mass litigation.
In addition to the aforementioned suits arising out of generative AI, we anticipate that facial recognition tools will also be in the hot seat in US courts. This will likely include more claims under the Illinois Biometric Information Privacy Act (BIPA) related to facial scanning, as well as an increase in geolocation claims due to vehicle tracking.
With large-scale privacy-focused class actions, plaintiffs will look to find a hook with old statutes that provide for statutory damages, like federal and state wiretapping laws and the Video Privacy Protection Act (VPPA). As the year progresses with more decisions from the courts being made, hopefully some potential class actions will be curtailed.
CLM's CEO on whether the insurance industry has diversified its leadership
Back when Ronna Ruppelt (pictured), the CEO of Claims and Litigation Management Alliance (CLM), first entered the insurance industry in the 1980s, she experienced a disheartening dearth of female representation in C-suite level positions.
However, as time has progressed and workplace inequities have come under laser focus, Ruppelt has noticed some positive trends in many companies’ employment rosters.
“The industry has made tremendous strides, and frankly, how can it not when 66% of your entering workforce is women. It’s going to happen, and we want to help support that,” she said.
“It’s a whole different world than when I first started my career.”
Why Insurance Carriers Should Make the Choice to Offer Choice
Insurers should be focused on conveniently offering customers a variety of insurance options that go beyond their core business solutions in order to more broadly meet the expectations of today’s consumers.
In the midst of one of the toughest operating environments in recent years, it’s clear: in order to attract and retain the right insurance customers, the U.S. property/casualty insurance industry needs to go beyond traditional business practices and do things differently. We must reimagine how we create and deliver value to customers, who are demanding that insurance be much simpler and more relevant, personalized, and accessible.
According to a recent report from the Insurance Information Institute and Milliman, the 2023 net combined ratio for the P&C industry is forecast to be 103.9, with personal lines at 109.9. There’s no doubt that P&C insurers are still feeling the effects of a hard market, but that of course doesn’t mean it will last forever. Afterall, every industry experiences market cycles, and insurance is no different.
It’s only a matter of time before we move onto the next phase of the cycle and begin to see insurance rates stabilize—and eventually fall—and carriers’ risk appetites expand. And when we do, there’s no doubt that the competition for select customers will be intense.
Bill Suneson is the CEO and co-founder of Bindable