MERGERS/ACQUISITIONS
The National Security Group Inc., Elba, Alabama, and VR Insurance Holdings Inc. announced Jan. 26 that they have entered into a definitive merger agreement, under which VR Holdings has agreed to acquire all of the outstanding common shares of National Security for $16.35 per share, representing a 77 percent premium to the closing price as of Jan. 25. The total transaction value is approximately $41.4 million, subject to certain provisions. VR Holdings is a newly formed Delaware company founded by Vivek Ranadivé who is the founder and managing director of Bow Capital Management LLC and its affiliated funds and has been chairman, chief executive officer and governor of the Sacramento Kings since 2013. The acquisition is expected to close by the end of the second quarter of 2022. National Security wrote about $4.3 million in premium in Louisiana in 2020, according to the summary financial information on Louisiana Department of Insurance’s website. The company writes in 10 states, and lost $8.8 million in 2020. Its national premium amounted to $62.9 million. National Security’s policyholders’ surplus stood at $36.5 million on assets of $78.6 million and liabilities of $42.1 million. Founded in 1947, National Security writes primarily personal lines property coverage.
LDI
The Louisiana Department of Insurance is streamlining the form-filing process for five additional lines of commercial insurance by adding them to the list of lines eligible for certified approval, Insurance Commissioner Jim Donelon announced Feb. 3. The certified approval process requires insurers to certify that their new forms comply with all applicable laws, regulations and directives. Previously, these forms were submitted to LDI for approval prior to taking effect. The department is making this change to create a more attractive environment for new and existing insurers in our state. Major lines such as workers’ compensation and commercial auto will remain subject to prior approval. The lines of commercial insurance now eligible for certified approval are environmental pollution liability, commercial excess and commercial umbrella, directors and officers (management liability), employment benefit plan/fiduciary, and commercial flood (not to include NFIP). The certified approval process has been in place and worked well for the following lines: aviation, fidelity and surety, commercial inland marine, boiler and machinery/equipment breakdown, and travel.
SURVEYS
According to a recent Breeze survey, 55 percent of respondents said they would, hypothetically, purchase an insurance product from Amazon rather than a traditional carrier, with 46 percent saying they would purchase from Google and 38 percent willing to buy insurance from Facebook. About 66 percent of respondents said they would consider purchasing auto insurance from an automobile manufacturer, like Tesla or Ford, and 61 percent would be interested in acquiring renters or homeowners insurance from a real estate company like Zillow or Trulia. Of those surveyed, 59 percent would be interested in purchasing health or life insurance from a wellness company or pharmacy, like CVS or Walgreens, and 51 percent said they would consider using a payroll or human resources company, like Zenefits or Bill.com, to buy disability insurance. According to the survey data, consumers are more comfortable with the idea of buying auto insurance from a carmaker than any of the other types of businesses surveyed.
Not many consumers want to turn to a computer when it comes to securing insurance coverage, according to a new survey. Digital insurance network Agentero surveyed 1,000 consumers ages 18 to 75 in October 2021 and found that 77 percent of consumers who have worked with an insurance agent would do so again, and 65 percent of consumers regardless of ever having worked with an agent in the past would seek one in the future. According to the results, released in January, Gen Z is the least likely to have worked with an insurance agent, at only 43 percent. This is in sharp contrast to Baby Boomers, 84 percent of whom have used an agent. Once younger generations work with an agent, they are most likely to do so again: 84 percent of Millennials and 69 percent of Gen Z would use an agent again. Yet the youngest consumers, Gen Z, are more suspicious that agents have their best interests at heart. Overall, 50 percent of Gen Zs said they always or usually trust their insurance agent. However, trust dramatically increases with Millennials: 74 percent said they always or usually trust their agent.
CROP INSURANCE
Reuters reported Jan. 28 that insurance payments to U.S. farmers for crops lost to droughts and flooding have risen more than threefold over the past 25 years, according to an analysis of federal data by the Environmental Working Group released Jan.27. The federal government pays about 60 percent of the nation’s crop insurance premiums through taxpayer subsidies, according to the Congressional Budget Office. Insurance payments to farmers due to drought rose more than 400 percent between 1995 and 2020 to $1.65 billion, while payments due to excess moisture — like floods — rose nearly 300 percent to $2.61 billion, according to EWG, which examined publicly available data from the U.S. Department of Agriculture. During the period analyzed by EWG, the number of insured acres grew 84.5 percent, according to the data from the department’s Risk Management Agency, which administers the federal crop insurance program. The report did not detail average increases in premiums since 1995. The most commonly insured crops include corn, soybeans, wheat and cotton. The federal crop insurance program requires farmers to meet minimal conservation standards, such as not planting on land highly vulnerable to erosion.
CATASTROPHE LOSSES
A report from Aon released Jan. 25 shows that 38 percent of natural peril losses were covered by insurance, an improvement over last year. The report, titled 2021 Weather, Climate and Catastrophe Insight Report, reveals a total of $343 billion in economic losses in 2021, $329 billion of which resulted from weather and climate-related events, making last year the third costliest year on record after adjusting for inflation. While losses were up from 2020, the number of notable disaster events slightly decreased, demonstrating the heightened costliness and severity of these events. Despite an increase in overall losses from 2020, the protection gap of economic losses not covered by insurance decreased from 63 percent to 62 percent in 2021. Other key findings from the report include: 401 notable disaster events were recorded in 2021 worldwide, down from 416 in 2020; There were 50 instances of billion-dollar economic loss events, with 20 of the events reaching the billion-dollar insured threshold; wildfires increased in prominence as conditions have become more conducive for rapid fire spread; the hottest temperature ever reliably measured on Earth was unofficially recorded in Death Valley, California, on July 9, 2021, at 130.0 degrees; Hurricane Ida topped the top 10 list of catastrophe events in 2021 at $75.3 billion in economic loss, $36.0 billion of which was insured.
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