INSURANCE TECHNOLOGY

Arthur J. Gallagher & Co. Announces Agreement To Acquire Willis Towers Watson plc Treaty Reinsurance Brokerage Operations

Arthur J. Gallagher & Co. | August 16, 2021

Arthur J. Gallagher & Co. today announced an agreement to acquire the treaty reinsurance brokerage operations of Willis Towers Watson plc. The transaction is expected to close during the fourth quarter of 2021.

"Broadening our reinsurance brokerage offerings has been a strategic objective at Gallagher and this acquisition will significantly enhance our global value proposition," said J. Patrick Gallagher, Jr., Chairman, President and CEO. "We were very impressed with the Willis Towers Watson reinsurance professionals we met during our initial due diligence and strongly believe a combination will significantly enhance our offerings to clients and prospects. I look forward to welcoming the 2,200 new colleagues joining us as part of this transaction to our growing Gallagher family of professionals."

Benefits of the acquisition are expected to include:
  • Expanded global value proposition within reinsurance brokerage
  • A broad suite of analytics capabilities including actuarial services, catastrophe modeling, dynamic financial analysis, rating agency analysis and capital modeling
  • Addition of talented management team
  • Increased product breadth & offerings
  • Further leveraging of Gallagher's industry-leading alternative risk and ILS business
  • Strengthened relationships with major insurance carriers

Acquired Operations
The operations include all of Willis Re's treaty reinsurance brokerage operations. For the year ended December 31, 2020, these operations generated $745 million of estimated pro forma revenue and $265 million of estimated pro forma EBITDAC. The pro forma 2020 figures include revenues reported in Wills Re's 2020 unaudited financial information, and reflect known growth, as well as Gallagher's estimate of "breakage", defined as known lost business and the departure of key brokers and other employees, as well as normalization of operating expenses and additional investments. Willis Re's treaty reinsurance business operates in 24 countries, places over $10 billion of premium annually and represents over 750 insurance and reinsurance company clients.

Key Transaction Terms
Under the agreement, Gallagher will acquire the combined operations for an initial gross consideration of $3.25 billion, and potential additional consideration of $750 million subject to certain third-year revenue targets. Gallagher intends to finance the transaction using cash on hand, including the $1.4 billion of net cash raised via its May 17, 2021 follow-on common stock offering and the $850 million of net cash borrowed via its May 20, 2021 30-year senior note issuance, short-term borrowings and additional free cash generated before close. The funding contemplates Gallagher maintaining its investment grade debt rating.

Integration is expected to take approximately 3 years with total non-recurring integration costs estimated to be approximately $250 million. After giving effect to these assumptions and pro forma results discussed above, the acquired operations would have been approximately 5% accretive to Gallagher's 2020 adjusted GAAP EPS excluding earnings from clean energy investments and 9% accretive to Gallagher's 2020 adjusted GAAP EPS excluding amortization and earnings from clean energy investments.

Pro forma revenues – Pro forma revenues reflect Gallagher's estimate of revenues reported in the acquired operations' 2020 unaudited financial information, reflecting known growth, as well as "breakage", defined as known lost business and the departure of key brokers and other employees.

Other Cost Adjustments - In addition, specific costs have been identified as adjustments to the acquired operations' 2020 financial statements in order to better reflect Gallagher's estimate of pro forma. Specifically, these cost adjustments include the normalization of operating expenses to reflect the extraordinary impact of the COVID-19 pandemic in 2020 and additional investments in operations attributed to the target business based on the estimated costs to provide specific services from the center.

About Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. The company has operations in 57 countries and offers client service capabilities in more than 150 countries around the world through a network of correspondent brokers and consultants.

Spotlight

The business environment is full of uncertainties and incidences that could potentially hurt your business at some point. It is critical that as a business owner, you take proper steps that will help you cushion your small business against any potential risk like supply chain interruption, physical damage to your assets, work accidents, civil commotions among others. The probable outcomes of these incidents could have drastic and far-reaching effects on SMEs.


Other News
INSURANCE TECHNOLOGY

Demotech Withdraws Financial Stability Ratings® Assigned to Lighthouse Property Insurance Corporation and Lighthouse Excalibur Insurance Company

Demotech, Inc. | April 01, 2022

Effective March 29, 2022, Demotech, Inc. withdrew the Financial Stability Ratings® (FSRs) previously assigned to Lighthouse Property Insurance Corporation and Lighthouse Excalibur Insurance Company. Despite a substantial capital contribution in the fourth quarter 2021, the operating loss in 2021, which reflected the evaluation of losses and loss adjustment expenses associated with Hurricane Ida, resulted in a level of capitalization below what was needed to sustain FSRs at the A level." Joseph Petrelli, President, Demotech, Inc. About Demotech, Inc. Demotech, Inc. was the first firm to review independent, regional and specialty insurers. Since 1985, Demotech has served the industry by assigning accurate, reliable, and proven Financial Stability Ratings® to Property & Casualty insurers and Title underwriters. FSRs provide an objective baseline of the solvency of an insurer. Demotech's philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size. Demotech's increasing accreditations and acceptances has resulted in its review of more than 450 insurers operating in the US.

Read More

INSURANCE TECHNOLOGY

Spot Pet Insurance Enters the Global Pet Insurance Market

Spot Pet Insurance | April 08, 2022

Spot Pet Insurance, a digital-first pet insurance provider in the United States has strengthened its reach internationally with the launch of its services across Canada. With an estimated 8.3 million Canadian households that own cats, and 8.2 million that include a dog, Spot offers affordable plan options for the pet-centric community to help them secure their pet's well-being so they may enjoy healthier lives together. Only 3% of pet parents have pet insurance for their furry friends in Canada[ii]. Spot's mission is to help protect pet parents while continuing to help build strong communities of pet lovers. Through pet health-focused education, we spread the importance of peace of mind, to enjoy many years of pet health together." Trey Ferro, CEO at Spot. Caring for pet parents is just as much a priority for Spot as caring for their pets. With that in mind, the business focuses on a 'Love Brand' approach to pet health and supports policyholders in the U.S. with personal calls welcoming them to Spot, and bereavement calls when their pet has passed away. The pet insurance provider recognizes the many challenges of pet parenting, and aims to reduce difficult decision-making when it comes to the love for their furry family members. Through a holistic approach to pet health, plan options in the U.S. provide coverage for behavioral problems, alternative therapies for covered conditions, and additional options for Preventative Care coverage at a nominal extra fee. Pet insurance plans provided by Spot in the U.S. feature: Easy claims submission through the Spot App., website or email. 24/7 VetConnect™ telehealth support whenever you need it. Up to 90% reimbursement rate. 30-Day money-back guarantee[1] if the policy is cancelled within the first month. Technology and innovation is at the forefront of Spot's approach to pet wellness, conveniently enabling pet owners to create custom plans and easily manage their entire account on https://spotpetins.com/. Claims submissions are processed fast in a secure, dedicated web platform and mobile app. Assisted by automation processes, the claims team works to speed up reimbursements whenever possible. The user-friendly site is also able to quickly generate a free quote in under 30 seconds, and additional pets receive a 10% multi-pet discount with plans in the U.S. Spot's digital-first, self-service members portal allows pet parents to easily access its cat insurance and dog insurance offerings, and rest assured of reimbursements of covered vet costs. Spot's agile business model allows us to react quickly to market trends and drive technology and innovation, which has helped us enhance critical processes such as the user experience, customer service, and digital claims, As an insurtech our focus on technology, innovation, and people sets us apart from other businesses and helps Spot stand out." Spot President, Scott Taylor. Administering the claims for U.S. pet insurance policies offered by Spot is one of the trusted industry veterans and specialists in insurance policies for cats and dogs, C&F Insurance Agency, Inc. U.S. pet insurance policies offered by Spot are underwritten by United States Fire Insurance Company. Canadian pet insurance policies offered by Spot are underwritten by Northbridge General Insurance Corporation and administered by PTZ Insurance Services Ltd. About Spot Pet Services, LLC: Spot Pet Services, LLC is an insurance producer founded in Miami and West Palm Beach, Fl. In the U.S., Spot offers plan options that include Accident-Only and Accident & Illness insurance. Spot provides insurance plan options, communications, and employees that support humans in forming the best relationship with their pets over a long, healthy life together. Pre-existing conditions are not covered. Waiting periods, annual deductible, co-insurance, annual limits and exclusions may apply. For all terms and conditions visit spotpetins.com/sample-policy. Preventive Care reimbursements are based on a schedule. Accident and Illness coverage reimbursements are based on the invoice. Products, schedules, discounts, and rates may vary and are subject to change. More information available at checkout. About Spot Pet Insurance Services, ULC: Spot Pet Insurance Services, ULC is a company with an Ontario, Canada-based team that offers products in Canada. In Canada, Spot Pet Insurance plan options include Accident-Only, and Accident & Illness insurance with optional Routine or Preventative Wellness Rider. Spot pet insurance plan options, communications, and employees help support humans in forming the best relationship with their pets over a long, healthy life together.

Read More

INSURANCE TECHNOLOGY

New ATRI Research Evaluates Motor Carrier Strategies for Responding to Rising Insurance Costs

The American Transportation Research Institute | February 18, 2022

The American Transportation Research Institute (ATRI) today released a new report analyzing trucking industry impacts from the rising costs of insurance. This analysis, a top priority of ATRI's Research Advisory Committee, utilized detailed financial and insurance data from dozens of motor carriers and commercial insurers. The report assesses immediate and longer-term impacts that rising insurance costs have on carrier financial conditions, safety technology investments and crash outcomes as well as strategies used by carriers to manage escalating insurance costs. The study found that carrier strategies included decreasing insurance coverage levels, raising deductibles and/or Self-Insurance Retention (SIR) levels, and decreasing investments in other cost centers. In spite of this increased liability exposure, out-of-pocket incident costs and carrier crash involvement remained stable or decreased among a majority of respondents. Despite reductions in insurance coverage, rising deductibles and improved safety, almost all motor carriers experienced substantial increases in insurance costs from 2018 to 2020. Premiums increased across all fleet sizes and sectors, with small fleets paying more than three times as much as very large fleets on a per-mile basis. One-third of respondents reported cutting wages or bonuses due to rising insurance costs, and 22 percent cut investments in equipment and technology – potentially creating future safety and driver shortage concerns. However, in the short-term, crash data confirms that carriers that raised deductibles or reduced insurance coverage were generally incentivized to reduce crashes in the subsequent year. Finally, the research describes a process for calculating the "Total Cost of Risk" in order to evaluate the full scale and impact of rising insurance costs on a carrier's long-term safety and financial viability, including safety investments in drivers, programs and technologies. "ATRI's study corroborates the Triple-I's research on rising insurance costs and social inflation – that increased litigation and other factors dramatically raise insurers' claim payouts, External factors that go well beyond carrier safety force commercial trucking insurance costs to increase, which then requires carriers to redesign their business strategies. The higher premiums ultimately tend to be passed along to consumers in the form of higher prices for goods and services." -Dale Porfilio, Chief Insurance Officer of the Insurance Information Institute.

Read More

LIFE INSURANCE

SCOR and Its Subsidiary ReMark Announce a Partnership With Atidot on a New In-Force Performance Solution for Life Insurers

SCOR | April 25, 2022

SCOR and its subsidiary ReMark announce that they have signed a partnership agreement with Atidot on a solution designed to increase in-force business value for life insurers. The innovative digital solution will deliver significant value for the partners’ clients by better predicting policyholder behavior and developing engaging marketing strategies to retain customers. A global reinsurer, SCOR continues to leverage its industry expertise and collaboration with ecosystem partners to design and offer innovative solutions to its clients that help drive growth, solve key business problems, and achieve strategic objectives. SCOR believes that it’s not enough for a reinsurer to provide competitive reinsurance in today’s market. This partnership reflects our commitment to foster solutions that add value to our clients, and to ensure that life insurance meets the needs of more consumers in a personalized and engaging way.” Rick Pretty, Senior Vice President and Head of Knowledge Commercialization at SCOR. The solution combines Atidot’s artificial intelligence and data modeling platform, with ReMark’s solid marketing expertise and consumer insight. Insurance companies can expect to better engage with customers, improve retention of existing policies, optimize policyholder coverage and increase the value of their in-force business. The partners have a strong track record in the U.S. market. This partnership provides a unique solution in the industry, Our predictive modeling is based on advanced data science and enriched data that creates a whole new level of engagement opportunities for customers and advisors. It’s a win-win.” Dror Katzav, CEO and Founder of Atidot. Because carriers’ business objectives and distribution needs vary, this new solution was designed to be customizable and flexible. Atidot will first score carrier data sets to identify policies that, for example, are likely to lapse in the next four to six months. ReMark will then use this analysis to develop appropriate marketing campaigns aimed at proactively preventing lapse and following up on those leads with a high propensity to buy. The solution can be easily adapted to also identify opportunities within a customer database for upselling and cross-selling. It is end-to-end, and includes insurer and agent-branded communications, as well as personalized marketing and sales execution strategies. We are proud to bring ReMark’s proven experience of engaging end-consumers to the table, having run over 12,000 campaigns to date. This solution is easy to implement for carriers and I’m excited to see how it will improve our clients’ business outcomes.” Steve Gaertner, Senior Vice President, Distribution Strategies for ReMark. About Atidot Atidot is a cloud-based AI and predictive analytics solutions provider for life insurance companies. Our data-driven turnkey solutions directly impact companies across the value chain, help them serve their customers better, and generate new revenue streams. Founded by a team of data scientists and actuaries, Atidot works with leading carriers in North America and Europe to optimize their book of business. Atidot has offices in California, the UK, and Israel and was awarded by Gartner to be ‘Cool Vendor 2019’ in Insurance.’ About ReMark ReMark is a global insurance consultancy helping insurers worldwide grow sustainably. Part of the SCOR Group, since 1984 they’ve reached over 1 billion people with their data intelligence, marketing and technology solutions, and ran over 12,000 campaigns. ReMark is the brand behind the award-winning Good Life health & wellness app and Velogica underwriting software. They work with over 500 insurers, as well as with partners outside the industry, like Garmin, local governments and more. Each year ReMark publishes the largest survey of insurance consumers worldwide—the Global Consumer Study—relied upon by industry leaders to stay informed on current trends. About SCOR SCOR, the world’s fourth largest reinsurer, offers its clients a diversified and innovative range of solutions and services to control and manage risk. Applying “The Art & Science of Risk”, SCOR uses its industry-recognized expertise and cutting-edge financial solutions to serve its clients and contribute to the welfare and resilience of society. SCOR offers its clients an optimal level of security with its AA- rating or equivalent from S&P, Moody’s, Fitch and AM Best. The Group generated premiums of more than EUR 17.5 billion in 2021, and serves clients in more than 160 countries from its 36 offices worldwide.

Read More

Spotlight

The business environment is full of uncertainties and incidences that could potentially hurt your business at some point. It is critical that as a business owner, you take proper steps that will help you cushion your small business against any potential risk like supply chain interruption, physical damage to your assets, work accidents, civil commotions among others. The probable outcomes of these incidents could have drastic and far-reaching effects on SMEs.

Resources