News
Liberty Mutual sees net income dive
LMHC (consisting of Liberty Mutual Holding Company and its subsidiaries) has published the group’s financial results for 2023.
Net income attributable to LMHC was $213 M in 2023 vs $414 M in 2022.
Choosing to focus on the quarterly figures, Liberty Mutual president and chief executive Tim Sweeney said: “We had a strong finish to the year with net income attributable to LMHC of $654 million for the fourth quarter. We continue to make progress toward our 95% combined ratio target by the end of 2025, with 4.7 points of improvement in our underlying combined ratio and 2.3 points of improvement in our total combined ratio from the prior year quarter.
“We made particularly strong progress in US retail markets, where our underlying combined ratio improved by 7.4 points and total combined ratio dropped 6.6 points, as accelerating earned rate and targeted underwriting actions positively impacted the loss ratio.
“Despite higher loss activity in the quarter, global risk solutions drove 3.7 points of improvement in total combined ratio from full year 2022, driven by lower catastrophe losses and rate actions.
“Expense efficiencies are also a key part of our profit improvement plan, and I am pleased to report that we achieved $360 million in run-rate expense savings from actions taken in 2023. Looking ahead to 2024 and beyond, we will continue to focus on our profit improvement program, working to build upon the solid progress we have made to date.”
American Family Insurance's 2023 results buried by weather and inflation woes
American Family Insurance Group has reported its financial outcomes for 2023 amid a challenging year marked by severe weather and inflationary pressures.
The insurance giant witnessed a significant surge in catastrophe claims, reaching a record $3.5 billion due to various severe weather events, from winter storms to tornadoes and hail across numerous states. This marks an increase from the $2.8 billion recorded in catastrophe claims in 2022.
American Family Insurance also faced an uphill battle with escalating claim costs, driven by a combination of market pressures, including inflation and rising costs for labor, replacement vehicles, auto parts, and building materials.
This resulted in a combined ratio of 110.8% for all property-casualty lines, a slight improvement from 111.4% in 2022. Nonetheless, the company reported a net underwriting loss of $1.7 billion for the year, compared to $1.5 billion in the previous year.
"Outstanding" 2023 leads to best underwriting result in recent history: Lloyd's
In a trading update for its full year 2023 financial performance, global insurance and reinsurance marketplace Lloyd’s has revealed its underwriting profit increased by £3.3 billion to £5.9 billion.
Burkhard Keese, Lloyd’s CFO commented, “2023 was an outstanding year for the Lloyd’s market. We continued to see sustainable, profitable growth and performance, leading to our best underwriting result in recent history and a rock solid balance sheet that gives us and our stakeholders confidence in an uncertain environment.”
Lloyd’s also disclosed that gross written premium in 2023 increased by 11.6% to £52.1 billion, reflecting 4% organic growth and 7% price change.
Meanwhile, the market’s combined ratio for the year improved by 7.9 percentage points from 2022 to 84%.
Thirty-three Percent of Households with Insurance Would Switch Providers to Acquire Smart Home Devices
Parks Associates' research study, Insurance Opportunities in the Smart Home, finds that one-third of US internet households with homeowner's/renter's insurance would switch providers to acquire smart home devices. The study of 8,000 US internet households investigates consumer preferences for IoT devices that can impact insurance premiums or claims and evaluates the opportunity for IoT growth through the insurance channel.
Thirty-three Percent of Households with Insurance Would Switch Providers to Acquire Smart Home Devices
With insurance costs rising nationwide, homeowners and insurers are both looking for solutions to reduce premiums, claims, and payouts. Smart home devices can detect and prevent costly damages, particularly rated to water and faulty wiring. Water-related damage is by far the most common home damage, with 26% of US households reporting this kind of damage. According to the Insurance Information Institute, the average cost of water damage/leaks is $9,633, while the average for flood/weather-related damage is $8,625.
"Insurance is a highly competitive industry, with numerous companies offering similar products," said Jennifer Kent, VP, Research, Parks Associates. "Customers often have multiple options to choose from, making it easier for them to switch to a different insurer. Smart home devices can lure customers from their existing insurance providers and attract customers who are new to the home insurance catego
Research
Get Ready: Experts Warn of Intense 2024 Storm Season
Hurricane season is months away – or is it? Experts are predicting an early, and possibly more severe storm season in 2024. Though hurricane season is some time away, the Atlantic Ocean’s temperatures are unusually high for this time of year, signaling an increased likelihood of a more intense hurricane season. This heightened activity could be further amplified by the emergence of La Niña conditions.
According to Brian McNoldy, a senior research scientist, the combination of warmer ocean temperatures and La Niña suggests a season with potentially more and stronger Atlantic storms, as warm waters fuel both the formation and intensification of these systems.
The forecast for the 2024 Atlantic hurricane season points towards an unprecedented level of activity according to Tropical Storm Risk (TSR). TSR predicts that North Atlantic hurricane activity in 2024 will be very active with activity about 30% above the 1991-2020 30-year norm and around 50% above the long-term 1950-2023 norm. This prediction suggests a shift in climatic patterns that could lead to more frequent and potentially more severe hurricanes.
Commentary/Opinion
The implications of rising construction costs on property insurance
Find out how carriers are responding
The following article has been supplied by REInsurePro.
In recent years, the construction industry has faced unprecedented challenges. Labor shortages, supply chain disruptions, and high inflation rates have reshaped the market, causing construction costs to skyrocket. As we examine the causes of these increases, it becomes evident that repercussions extend far beyond construction sites. Insurance carriers now face financial challenges that have forced them to reevaluate their strategies for maintaining a sustainable business.
Demand for parametric insurance to rise in 2024 amid growth in confidence: Swiss Re's Hotz
Speaking in an interview with Reinsurance News, Martin Hotz, Head Parametric Nat Cat, Swiss Re Corporate Solutions, suggested that the demand for parametric insurance will continue to rise in 2024, as “there is no fine print in a parametric policy, which clients appreciate in these uncertain times.”
According to Hotz, the demand for parametric insurance has been “rising steadily” in recent years, and he expects this to continue in 2024.
“The three main qualities of parametric insurance are speed, flexibility in the use of payouts and transparency. There is no fine print in a parametric policy, which clients appreciate in these uncertain times,” Hotz explained.
He also observed that advances in technology and data collection mean that the parametric value proposition is “becoming ever more compelling” as monitoring and measurement of the natural world becomes ever more precise.
Hotz continued, “To meet the growing demand for fast and flexible cover, larger commercial insurance brokers now have expert teams dedicated to parametric insurance.
“Our broker partners play an important role in the product education process, and we welcome this specialization which will be one of the factors that further contributes to the growth of the parametric insurance market.”
Insurer CEO Warns Limits on Cancellations Will Deter Carriers From Florida Market
The head of two property insurance companies set to enter the Florida market this year is warning state lawmakers that bills that would limit some policy cancellations and nonrenewals after storm damage could do more harm than good.
“It absolutely it gives me pause to sit here and see the state revert back,” said Ken Gregg, the CEO of Orion180 insurance companies. “If this thing passes, it would absolutely bring up a question of concern about coming to Florida, or how much I’m willing to do in Florida.”
Gregg was talking about Senate Bill 1104 and House Bill 1149, which were slated for floor votes this week, the final week of the Florida Legislature’s regular 2024 session. Those bills have been dubbed “the agents’ bills,” and have been pushed, at least in part, by the Florida Association of Insurance Agents.
Both bills would retain current law provisions that restrict HO cancellations or nonrenewals until at least 90 days after storm repairs have been made, with some exceptions, including fraud, misrepresentation or nonpayment of premiums. The House bill would allow the state insurance commissioner to ban cancellations and nonrenewals for up to 270 days in ZIP codes most affected by a storm, even for homes with flood damage that was not covered by a wind or multi-peril policy.
InsurTech/M&A/Finance💰/Collaboration
Insurance M&As drop in 2023, but expected to rise again this year
Insurance company merger and acquisition deals fell off the table in 2023, hampered by the rising cost of capital and other negative macroeconomic factors. But industry executives, analysts and others say the M&A market will bounce back this year, and most are bracing for announcements of deals they believe are already in the pipeline.
“As increases in interest rates and inflation ease, pent-up activity may drive an upsurge in deals later into 2024,” said a report from Deloitte Financial Services. “Insurance technology companies (insurtechs) remain front and center of acquisition activity as carriers increasingly look to these capabilities for point solutions across the value chain to power transformation efforts.”
Overall, insurance M&As were down 24% in the first half of 2023 from the same period in 2022, the lowest first-half tally of deals since 2020, according to Brown and Brown Insurance. The drop continued into the third quarter, with 34% fewer deals year-over-year. The total insurance M&A deal count for 2023 was an anticipated 750 transactions, fewer than any year in the post-pandemic bubble.
Insurtechs may see M&A activity
There is a growing consensus that the insurtech sector, which was battered by venture capital drying up, Wall Street displeasure, and exploding loss ratios, is the place to watch, at least initially, for new M&A deals. But legacy insurers may also join the game.
“I do think there is going to eventually be some consolidation on the legacy carrier side of things,” said Bryan Davis, executive vice president and Head of VIU by HUB, a digital brokerage platform. “It’ll probably have little longer tail with some of those regional companies getting a little bit more squeezed. But it will take off once you see a lot more of those system transformations wrap up.”
Frederick Mutual Insurance embarks on AI-powered transformation with Federato
Frederick Mutual Insurance Company has embarked on a business transformation with Federato, the AI company powering RiskOps and real-time portfolio management.
As Frederick Mutual transitions to a solely commercial-line insurance carrier, they will use Federato to streamline core systems and move toward completely digital distribution. Federato’s tech-first approach to implementation will equip Frederick Mutual’s underwriters with sophisticated data capabilities typically limited to larger carriers with larger budgets and headcounts, and on a much shorter timeline than conventional digital transformation rollouts. This initiative is designed to reduce friction in the underwriting workflow, enable real-time portfolio management, and dramatically improve Frederick Mutual’s customer experience.
International Women's' Day 2024
International Women's Day
Imagine a gender equal world. A world free of bias, stereotypes, and discrimination. A world that's diverse, equitable, and inclusive. A world where difference is valued and celebrated. Together we can forge women's equality. Collectively we can all #InspireInclusion.
Celebrate women's achievement. Raise awareness about discrimination. Take action to drive gender parity.
IWD belongs to everyone, everywhere. Inclusion means all IWD action is valid.
American insurance industry's Elite Women of 2024
Winners recognized for exceptional leadership and innovation
In time for International Women’s Day, Insurance Business America (IBA) has unveiled its 2024 Elite Women list, showcasing 62 distinguished female professionals who have significantly impacted the US insurance sector.
This year’s honorees span a broad spectrum of roles, including partnership strategists, marketing executives, brokers, and underwriters, each demonstrating exceptional leadership and innovation within their respective fields.
An independent panel of judges, comprising respected figures from various industry associations and organizations, collaborated with the IBA team to assess the nominations. This esteemed panel included:
- Angela Lee from the Asian American Insurance Network
- Jose Aponte from the Latin American Association of Insurance Agencies
- David Sampson from the American Property Casualty Insurance Association
- Carol Murphy from HUB International
- Catherine Richardson from the Council of Insurance Agents & Brokers
- Charmaine Davis from the National African American Insurance Association