Research
Who’s Raising Homeowners Rates? S&P GMI’s Q2 2024 Analysis
According to an analysis of rate filings “disposed” by state regulators— approved or allowed by regulation—in second-quarter 2024, Liberty Mutual had the highest number of rate hikes approved in the quarter.
The analysis from S&P Global Market Intelligence puts the sum of calculated premium changes for Liberty Mutual’s 117 increases at more than $600 million.
Ranking filers by the calculated dollar amounts of premium change associated with approved percentage changes, State Farm had the biggest—$108 million associated with an 11.3 percent rate increase in Minnesota impacting 600,000 policyholders. According to S&P GMI, the nation’s largest insurer, State Farm—or, in particular, the group’s State Farm Fire and Casualty Co. subsidiary—had five of the 10 biggest increases based on the calculated premium impact. The other notable State Farm changes impacted policyholders in Missouri (12.5 percent), Washington (17.9 percent), Oklahoma (9.7 percent) and Arizona (16.5 percent)
Also listed among the top 10 based on calculated premium impact, Travelers (The Standard Fire and Casualty Co.), CSAA Insurance Exchange, and Farmers Insurance raised rates in California, with Travelers recording the largest change —15.3 percent with an associated calculated premium change of $70.8 million.
InsurTech/M&A/Finance💰/Collaboration
Hi Marley Named to CNBC’s World’s Top Insurtech Companies 2024 List
Hi Marley, creators of the only intelligent conversational platform built for the P&C insurance industry, is proud to announce its inclusion on CNBC's inaugural World's Top InsurTech Companies list.
Hi Marley's platform enables insurance carriers to communicate with customers through text messaging, streamlining claims processes, improving employee experiences and enhancing customer satisfaction. By leveraging data, analytics and artificial intelligence, Hi Marley helps insurance carriers improve operational efficiency and deliver a more personalized, frictionless customer experience.
"We are incredibly honored to be recognized by CNBC as one of the world's top InsurTech companies," said Mike Greene, CEO of Hi Marley. "This achievement is a testament to the hard work and dedication of our talented team, as well as the trust of our valued customers and ecosystem partners. We remain committed to driving innovation in the insurance industry and empowering carriers to make insurance more lovable for their policyholders."
CNBC, in partnership with Statista Inc., compiled the World's Top Insurtech Companies 2024 list based on a comprehensive analysis of key metrics for over 1,000 companies, including total funding, user base, and overall impact on the insurance industry.
Climate/Change/Sustainability/ESG
Glacier outburst flooding damages over 100 homes in Juneau, Alaska
Key Points:
- A glacial outburst flood from the Mendenhall Glacier began Monday, causing water levels to reach up to 16 feet in Juneau by Tuesday.
- The glacier's Suicide Basin began to peak on Aug. 1 after July saw twice the amount of rain the area usually receives.
- Glacial lake outbursts like this are spawned when basins drain rapidly, something Juneau officials compared to "pulling out the plug in a full bathtub."
An outburst of flooding from a glacier brought severe flooding to Alaska's capital, with more than 100 homes experiencing damage.
The glacial outburst flood from the Mendenhall Glacier began Monday, causing water levels to reach up to 16 feet in Juneau by Tuesday, according to city officials. There have been no reports of injuries in the city of about 32,000 people as of Wednesday.
The glacier's Suicide Basin began to peak on Aug. 1 after July saw twice the amount of rain the area usually receives, Juneau officials confirmed in a news release. Officials say that water from Mendenhall Lake significantly poured into the Mendenhall River by Sunday, leading to evacuation warnings for residents Monday. The lake's water levels declined over 400 feet from the outburst primarily between Monday and Tuesday, officials said.
Thousands more move into fire and flood-prone areas in the US: Redfin
Areas in the US endangered by wildfires, flooding, and extreme heat saw thousands more people moving in than out in 2023, according to a recent Redfin report.
High-fire-risk counties in the US experienced 63,365 more people move in than out, with a significant portion moving to fire-prone Texas.
However, this trend was not consistent across all high-fire-risk states. In total, 34,170 people left these high-risk areas last year. In California, more residents left high-fire-risk areas than moved in, accounting for 50.8% of the outflow, up from 41.9% in 2022.
Redfin commented that this increase “may signal that people in the Golden State have grown more responsive to fire risk.”
Financial Results
Liberty Mutual reports strong Q2 results
Liberty Mutual Holding Co. Inc. Thursday reported second-quarter net income of $717 million, compared with a $585 million net loss for the same period in 2023.
Liberty Mutual President and CEO Tim Sweeney, in a conference call with analysts, attributed the turnaround to continued improvement in the insurer’s underlying combined ratio and strong investment results.
“Despite continued pressure from elevated catastrophe activity, we reported strong financial results for the second quarter and first half of 2024,” Mr. Sweeney said.
Zurich Insurance outlines "excellent performance"
Zurich Insurance Group has performed excellently in the first half of 2024, according to its “very pleased” chief executive.
In the company’s half-year earnings report, Zurich outlined the following financial results:
Lifting the lid on the numbers, the insurer noted: “The results are driven by an ongoing robust performance in P&C, a record BOP in the life business, and excellent growth at Farmers. The market environment for commercial P&C remains highly attractive, with rates responding well to loss-cost trends.
“Retail and SME P&C results show improvement over the second half of 2023, despite significant weather events. This was driven by strong rate increases, supported by improved customer satisfaction and retention.”
It was pointed out that while P&C BOP went down by 1% in US dollar terms, the figure was up 3% in local currencies.
“The higher insurance revenue and a strong investment result were partially offset by a higher combined ratio, which increased 0.7 percentage points year over year to 93.6%, mainly driven by catastrophe losses,” Zurich said about its P&C segment.
Kemper's net income reaches $75.4m in Q2, Specialty P&C underlying CR hits 89.6%
In their results for the second quarter of 2024, Kemper Corporation has posted a net income of $75.4 million, a major improvement compared to a net loss of $97.1 million from the second quarter of 2023.
Kemper’s total revenues for Q2’24 decreased $132.9 million, or 10.5%, to $1,129.9 million, compared to the previous year, which the firm noted was mainly driven by a $69.7 million decrease from the Specialty Property & Casualty (P&C) Insurance segment due to continued lower new business volumes resulting from targeted actions to improve profitability, partially offset by higher average earned premium per exposure resulting from rate increases.
Additionally, the firm’s Specialty P&C Insurance segment reported an adjusted net operating income of $102.3 million for the quarter, a substantial improvement from an adjusted net operating loss of $10.8 million that the segment reported in the prior year quarter.
As well as this, the segment’s Underlying Combined Ratio sat at 89.6%, a 12.4 point improvement compared to 102.0% in the second quarter of 2023. Kemper stated that the improvement was primarily driven by higher average earned premiums per exposure resulting from rate increases and lower underlying claim frequency.
Moving towards the company’s Life Insurance segment, Kemper reported an adjusted net operating loss of $0.2 million for Q2’24, compared to an adjusted net operating income of $8.9 million in Q2’23.
Insurtech Lemonade 2Q24: A Financial Inception or Just Another Magic Show?
In the world of Insurtech, Lemonade has always played the role of the avant-garde protagonist, consistently pushing the boundaries of traditional insurance.
Their latest quarterly report for Q2 2024 feels like an epic blockbuster movie, filled with both thrilling highs and perplexing plot twists. If this report were a movie, it might resemble Christopher Nolan’s mind-bending movie “Inception” — layered, intricate, and leaving the audience questioning what is real.
Lemonade proudly announced that they were net cash flow (NCF) positive in Q2 2024, an impressive feat for any company. At first glance, this seems like a happy ending. However, digging deeper, it’s reminiscent of the dream layers in “Inception.” Despite this positive cash flow, the company reported a net loss of $57 million. It’s as if David Copperfield made the Statue of Liberty disappear while leaving its shadow behind. How can these two realities coexist?
Kaenan Hertz Kaenan is a professional in the areas of block-chain, telematics, wearables, analytics, artificial intelligence (AI) and Insurtech. He has played a key role in innovating many start-ups and established carriers. His advice has been widely appreciated in the financial community, which resulted in multiple quotes and publications in various media.
Hippo Holdings Inc. (HIPO) Reports Q2 Loss, Tops Revenue Estimates
Hippo Holdings Inc. (HIPO) came out with a quarterly loss of $1.64 per share versus the Zacks Consensus Estimate of a loss of $1.77. This compares to loss of $4.61 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 7.34%. A quarter ago, it was expected that this company would post a loss of $1.41 per share when it actually produced a loss of $1.47, delivering a surprise of -4.26%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
Hippo Holdings , which belongs to the Zacks Insurance - Multi line industry, posted revenues of $89.6 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 4.92%. This compares to year-ago revenues of $47.7 million. The company has topped consensus revenue estimates four times over the last four quarters.
Root, Inc. (ROOT) Reports Q2 Loss, Tops Revenue Estimates
Root, Inc. (ROOT) came out with a quarterly loss of $0.52 per share versus the Zacks Consensus Estimate of a loss of $1.74. This compares to loss of $2.55 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 70.11%. A quarter ago, it was expected that this company would post a loss of $2.51 per share when it actually produced a loss of $0.42, delivering a surprise of 83.27%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Root, which belongs to the Zacks Insurance - Property and Casualty industry, posted revenues of $289.2 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 25.74%. This compares to year-ago revenues of $74.8 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Root shares have added about 427.3% since the beginning of the year versus the S&P 500's gain of 9.9%.
Fraud
Good Faith Claim Handling in Fraud Investigations
Insurance fraud is rampant. It is considered to be the second costliest white-collar crime in America after tax evasion, costing consumers an estimated $308.6 billion each year.
It may involve outright fraud—such as a staged accident, arson, identity theft, contractor fraud or medical fraud—or it may involve soft fraud, such as a padded property claim or an exaggerated injury claim. In either case, fraud is pervasive, and combatting fraud is a challenge for all involved.
To avoid bad faith and potential extra-contractual penalties in the current litigious environment, insurance claim professionals must conduct their claim investigations while considering regulatory requirements, case law and industry standards, along with the potential legal ramifications for failing to adequately investigate suspicious claims.
Melissa Segel is a partner in Swift Currie’s Atlanta office. She represents insurance carriers and businesses in commercial litigation and insurance coverage matters with an emphasis on defending against bad faith and fraudulent claims.
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