Editor’s Note: This will be the last post for the year. I’ll be back in early January with something fun for everyone to debate. Progressive recently announced a special dividend of $13.50/sh, equal to over $8B. To put in context how large that is, it amounted to nearly 25% of Continue Reading
USAA Has Lost Its Mission
With all the news around California fires, year end earnings, and so on, I didn’t have the chance to write about Juan Andrade leaving Everest Re to take over USAA. I’ve met Juan a number of times over the years and he is a very capable executive. However, USAA needs Continue Reading
How State Farm Lost $8B In California
Yes, they underpriced business and had poor risk management. I think we all know that. But how did it happen? If you saw the recent Wall Street Journal article, you know that a state manager chose to prioritize making the agents happy over making State Farm money. This led to Continue Reading
How Long Can State Farm Lose Money? A Long, Long Time!
When I last wrote about State Farm, I suggested they had somewhere between $75-100B of excess capital. I commented at the time that their excess capital alone would make them the largest US insurer outside of Berkshire. Since then, State Farm has proceeded to post larger and larger underwriting losses Continue Reading
My Allstate Activist Campaign Proposal
You may have seen the recent news that famed activist investor Nelson Peltz took a stake in Allstate. This is surprising on a number of fronts. First, activist investing has largely failed in insurance (most prominently Carl Icahn and friends at AIG). Second, Allstate is not an obvious target for Continue Reading
Where Can Insurers Innovate? Teen Drivers!
Editor’s Note: If you missed last week’s post, there is still availability to have us help you shop for home or auto insurance. We had a number of people sign up last week, but we’re caught up now and can accept more. Sign up here. With all the energy spent Continue Reading
What State Farm Might Buy Next
There’s been a lot of talk about the State Farm deal to invest in ADT, much of which I think misses the point. When you invest $1.2B in a company, the rationale isn’t “hey, we might get a few extra customers”. It’s “we expect the investment return to be above Continue Reading
The Commoditization of Insurance and How It Harms Consumers
I teased this topic a bit in the intro to last week‘s post so wanted to expand on it here. One of the things that surprises me most when people talk about innovation in insurance is how often the elephant in the room is ignored. The general trend in insurance Continue Reading
The Pending Decline of Usage Based Insurance Pricing
How’s that for a provocative topic? Yes, just as usage based auto pricing has become mainstream, it has already peaked and nobody has realized it yet. Think of it like the Time magazine effect. When everybody recognizes the trend, it’s time to “sell the news”. Now, at the risk of Continue Reading
Recurring Transitory Inflation and Personal Lines Profitability
With Fed Chair Powell changing his tune about “transitory” inflation, I thought it would be worthwhile to begin a deep dive on the challenges inflation brings to insurers because there appears to be a lot of false confidence out there. I guess that makes insurance companies more like the Fed Continue Reading