In its fourth-quarter and full-year 2021 shareholder letter, Lemonade’s CEO wrote that 2022 is expected to be a year of peak losses. This follows unfavorable development and product mix changes that plummeted 2021 loss ratios into the 90s, 20 points higher over comparable 2020 periods. The projection is that 2022 will see highest losses, with…
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In 2019, Saudi Arabian Oil Co (Aramco) launched the world’s biggest Initial Public Offering (IPO). This enabled the Saudi government to raise $25.6 billion while diluting just 1.5% stake, at a valuation of $1.7 trillion. Soon, the Indian government plans to divest 5% equity for $8.7 billion in the insurance giant Life Insurance Corporation (LIC).…
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Since the first wave of challenger banks arrived around 2015 with basic account offerings, the biggest players branched out into lending, stock trading, savings, and junior accounts. Very few took decisive steps into the insurance market. As they sought competitive advantages, leading neobanks have since expanded their product offerings with insurance and boosted revenues with…
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Across economies, there is rising evidence of correlation between total shareholder return (TSR) and digital capabilities. “Digital champions” had annual TSRs that were 5% higher than “digital laggards”. They were also faster growing with nearly 6% higher annual premium growth and 1.8X higher valuation multiples. Their net promoter scores were 8 points higher. Successful digital…
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In the past year, technology stocks trailed on Wall Street, but insurtech stocks saw major declines. Lemonade fell to a market cap of $2.3B, more than 50% compared to its trading day price. Since its SPAC merger, Hippo’s market cap dropped to $1.5B from $5B. Root, a car insurance specialist went public in 2020 and…
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Car manufacturers generate revenue through vehicle sales and post-sale services. As newer business models such as mobility-as-a-service and vehicle-as-a-platform evolve, additional revenue streams are emerging. Whereas conventional businesses generate nearly 90% of revenue, over the next decade, this share is expected to shrink to about 70%. Vehicle-as-a-platform is relatively new with a below 1% share…
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During the financial crisis, American International Group (AIG) could only be saved by a government bailout. Since then, the prevailing sentiment has been that even without the crisis, AIG would have destroyed substantial value notwithstanding credit default swaps, largely on account of recurring material issues in its core operations. A decade after the crisis, AIG…
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Across industries, it’s generally accepted that it costs about five times as much to attract a new customer as it does to sell to an existing one. In insurance, the cost of acquiring customers (CAC) is higher, at seven to nine times that of selling to an existing customer. On average, that’s paying between $487…
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2021 has been momentous for deals. From AT&T’s media businesses merger with Discovery, Kansas City Southern railroad’s takeover and Square acquiring BNPL company Afterpay, global deals are on a roll. Transactions are expected to top $5 trillion this year. All this, while the pandemic is rising again, the global economy is still flaky, and developed…
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