Insurtechs and E&S players among fastest growing US P&C insurers

An analysis by S&P Global Market Intelligence has revealed the fastest growing insurers that file statutory statements, with insurtechs Lemonade and Root and E&S players Ategrity and Trisura among the top ten.

S&P Global Market Intelligence assessed entities that filed annual statutory statements in 2019 by direct premiums written (DPW) and net premiums written (NPW).

By DPW, the top three fastest-growing entities all began operating in their current state in 2018.

E&S insurer Ategrity Specialty Insurance was top, with its DPW growing 818.5 percent over 2018 to $95.4mn.

Scottsdale, Arizona-based Ategrity is run by Mike Miller, who was president at Scottsdale Insurance Company for 10 years from 2005 to 2015. Ategrity is an E&S carrier operating two underwriting divisions: brokerage and contract binding.

It was followed by workers compensation insurer Cimarron Insurance growing its DPW 426.3 percent to $13.3mn and Trisura Specialty Insurance growing 379.6 percent to $198.9mn.

Cimarron Insurance is the former ProSelect National Insurance, which was recapitalised and relaunched after being sold to Clear Underwriters in 2017.

Trisura is an Oklahoma City, Oklahoma based specialty insurance carrier led by Michael Beasley. It writes non-admitted business in all 50 states and Washington DC. Last year, it added the $30mn LP Risk trucking program, which was previously written 100 percent in London, led by Beazley.

Trisura focuses on programs where it will take minority risk positions working with program administrators and MGAs, typically targeting programs with $5mn to $20mn of annual premiums.

In February this year Trisura was rated A- by AM Best after acquiring a shell company that gave it the licences to write admitted business in 13 states.

Booming growth for insurtechs

Coming in fourth and eighth in the fastest growing entities by DPW are two insurtechs. Only a few insurtechs operate as licensed carriers and so would be eligible to appear in this ranking.

Root Insurance grew its premiums 324.0 percent to $451.1mn in 2019. The Columbus, Ohio-based auto insurer was founded in 2015 and bills itself as the nation’s first licensed insurance carrier powered entirely by mobile.

Root last September raised $350mn in a series E funding round led by DST Global and Coatue, which brought its total funding up to $545.5mn.

As this publication reported, Root this week announced an expansion into offering homeowners insurance through a partnership with American Family Insurance affiliate Homesite. This followed it expanding into renters insurance last November.

Homeowners insurtech Lemonade grew its premiums 147.1 percent in 2019 to $115.7mn.

New York-based Lemonade was set up by technology executives Daniel Schreiber and Shai Wininger in September 2016 to offer renters and homeowners insurance.

Last April it raised $300mn to fund US and European expansion, which brought its total funds raised to $480mn. Reports later in the year suggested that the insurtech had put on hold plans to float.

The fastest growing by NPW

Seven of the entities on the top 10 growers by DPW also appear in the list for the fastest growing entities by NPW: Cimarron, Trisura, Root, American Transportation Group Insurance, Houston General Insurance Exchange, Western Mutual Insurance Co of Minnesota and BlueShore Insurance.

Ategrity, the fastest grower by DPW, is not on the NPW list. SNL figures show that it ceded $81.5mn of its $95.4mn of DPW in 2019. Its NPW grew by 93.3 percent in 2019.

Lemonade also does not make the top ten growers by NPW. Its NPW actually grew faster than its DPW – 153.5 percent compared to 147.1 percent – to $104.6mn in 2019, but this was not enough to make the list.

One company that appears in the top ten growers by NPW but does not appear in the DPW top ten is Palomar Specialty Insurance.

Its $140.4mn of NPW in 2019 was up 404.2 percent on the previous year. In contrast, its DPW grew only 52.2 percent to $220.6mn last year.

S&P Global Market Intelligence explained that Palomar last year suspended a quota share agreement through which 35 percent of its earthquake premium had been ceded to a Bermudian affiliate.

The California-based catastrophe insurer raised net proceeds of around $87.4mn in an IPO last April.

The limits of looking at growth

While the rankings of the fastest growing US entities provides an interesting snapshot, it should be noted that it can be skewed towards newer entities as they are growing from a smaller base.

In addition, just because an entity is growing fast this is not necessarily a positive sign.

This week it was revealed that American Transportation Group Insurance Risk Retention Group - ranked fifth for DPW growth and sixth for NPW growth in 2019 – had been placed into administrative supervision.

The risk-retention group was placed under supervision after its premium growth greatly exceeded its business plan  allegedly as a result of improper actions by its former managing general agent.

S&P Global Market Intelligence reported that American Transportation Group had explained in a filing that the expansion in its premiums in 2019 was a result of a “a lack of viable insurance alternatives in the marketplace”.

But a recent complaint filed by American Transportation Group in a North Carolina court against its MVT Insurance Services alleged that the MGA sought to “sell as many … policies as possible, without much regard for proper underwriting and risk analysis.”

Growth continues into Q1

The impressive growth posted by most of these entities has continued into 2020.

For example, Ategrity’s DPW increased 163.8 percent in the first quarter to $163.8mn, while its NPW increased 94.3 percent.

Trisura increased DPW 184.8 percent to $89.7mn in Q1, while its NPW decreased 12.3 percent.

Root’s DPW increased 85.1 percent to $164.1mn in Q1, while Lemonade increased its DPW to 96.7 percent to $38.0mn.

Palomar’s increased its GPW 44.0 percent to $63.6mn, while its NPW grew 149.0 percent.