Three of the themes that have defined the insurance industry in the 2020s — the intersection of private equity and insurance and the role of social inflation in driving up property and casualty claims severity — have resurfaced in recent days

In a transaction announced June 1, 26North Partners LP's 26North Reinsurance Holding Co. agreed to acquire structured settlements annuity provider Independent Insurance Group LLC. The Jacksonville, Fla.-based Independent becomes the latest target in what appears to be a trend of reinsurers adding or expanding direct insurance origination capabilities through M&A, with ownership in this case transitioning from one private equity-backed group to another.

Also in the Sunshine State, P&C insurers continue to benefit from tort reform measures implemented in 2023. The group led by United Services Automobile Association announced a $500 million dividend for Florida private auto customers, just months after declaring a broader distribution to members nationwide. No state has experienced the sort of dramatic reversal of fortunes in private auto underwriting margins that Florida has in the years before and after 2023.

26North buying Independent Life

An offshore annuity reinsurer moving onshore through the acquisition of an active domestic primary insurer has not been without recent precedent, as 26North joins the likes of Converge Re II, Hildene Re SPC Ltd. and Malibu Life Reinsurance SPC.

The 26North reinsurance group positioned itself as an annuity reinsurer of choice and a leading partner to the life and annuity market through a business model that married long-term capital in the form of assumed liabilities with active portfolio management and investment-grade private origination. The addition of Independent Life, backed in part by funds associated with LKCM Headwater Investments LP, provides a direct, stable source of liabilities at a time when the supply of large blocks of annuities and opportunities to enter new forward-flow relationships may be waning.

US cedants reported having ceded $10.94 billion in aggregate reserves at year-end 2025 to 26North's three reinsurance entities: the Bermuda-domiciled AeBe ISA Ltd. and AeCe ISA Ltd., as well as the Cayman Islands-domiciled Vernon Re Spc Ltd. National Life Group's Life Insurance Co. of the Southwest, Brookfield Wealth Solutions Ltd.'s American Equity Investment Life Insurance Co. claimed 26North-related reserve credits of $5.83 billion, $3.90 billion and $1.20 billion, respectively. You can access a comprehensive, filterable list of all in-force US life and annuity reinsurance relationships at year-end 2025 by clicking here.

In the past, offshore reinsurers and/or their sponsors may have opted to build direct liability origination capabilities through the purchase of dormant insurers as clean shells as opposed to active entities with established books of business.

Independent Life reported $1.68 billion in total liabilities as of March 31, but $1.22 billion of that amount pertained to a coinsurance-with-funds-withheld agreement with Hannover Life Reassurance Co. of America, through which it cedes 75% of its in-force business. The company's core structured settlement products may feature life-contingent payment streams and are classified as annuity contracts, while others offer lump-sum payments and are accounted for as deposit-type contracts. It also offers indexed-linked structured settlement annuities under the iStructure brand.

RBC Capital Markets is serving as financial advisor to 26North Re, and Kirkland & Ellis LLP is serving as legal counsel. Piper Sandler & Co. is acting as exclusive financial advisor to Independent Group, and Mayer Brown LLP is serving as legal counsel in a deal that remains subject to regulatory and other customary approvals.

The announcement came months after Malibu Life Re agreed to acquire fixed indexed annuity (FIA) writer TruSpire Retirement Insurance Co., Hildene's parent entered a deal for FIA and multiyear guaranteed annuities writer SILAC Inc., and Converge Re's parent indirectly took a 49% stake in supplemental insurer Heartland National Life Insurance Co.

Social deflation

More details about the post-tort-reform success of Florida's private auto market continue to emerge, with USAA crediting the legislation for generating savings for its customers.

House Bill 837 arguably is best known for its repeal of Florida's one-way attorney fee provisions, which had been a key driver of claims severity in the state. But it also halved Florida's previous four-year statute of limitations for negligence-based claims and adopted a modified comparative negligence approach that makes a plaintiff who to more than 50% at fault for a crash or other incident ineligible to receive compensation for their injuries from a defendant. These measures, in tandem with a private auto market that was recovering rapidly nationwide as certain drivers of loss-cost inflation subsided and the industry rode a generational hard market, have led to significant outperformance in Florida for USAA and its peers. The Progressive Corp., for example, accrued $1.2 billion in Florida private auto policyholder credits in 2025 under the state's excess profits statute.

Using certain methodology applied by the NAIC in its periodic reporting of state-level, by-line profitability, which relies on a series of assumptions regarding the geographic allocation of certain categories of expenses, we estimate that Florida's direct combined ratios plunged to just over 81.0% in 2025 from a Hurricane Ian-inflated 121.9% in 2022. Our estimate of Florida's median direct private auto combined ratio of 105.3% for a seven-year stretch from 2016 through 2022 ranks fifth-highest in the United States; its subsequent 21.6 percentage-point decline to a two-year, post-reform mean of 83.7% stands as the largest such improvement in any state.

On an as-reported basis, USAA's Florida private auto direct incurred loss and defense and cost containment expense (DCCE) ratio plunged to 59.3% in 2025 from 112.7% three years earlier. Its Florida result exceeded its national direct loss and DCCE ratio by an average of 15.1 percentage points in the five calendar years prior to the implementation of tort reform, and was lower by an average of 10.4 points from 2023 through 2025.

For a broader overview of improvements in Florida private auto results across leading market participants, we recommend using the Insurance Statutory Market Share application on S&P Capital IQ Pro. Upon accessing the application, follow these steps:

1) Populate the dropdown boxes at the top with the following entries: Industry=Property and Casualty; Company Level=Top-level view; Geographical Regions: State & Territories, and then Florida in the Select State box;

2) For the Lines of Business dropdown boxes, change NAIC as Reported to SNL Minor Lines. Then, below, select Private Auto: State.

3) Click Generate Report, then click on Export to Excel - Expanded.

This version of the output provides a comprehensive view of all available paid and incurred loss ratio metrics. The loss and DCCE ratio appears as "Simple Loss and LAE Ratio." This statistic excludes adjusting and other expenses. Given the role of litigation before and after House Bill 837, we recommend including the DCCE component to most effectively assess the legislation's impact. USAA's Florida private auto DCCE ratio of 2.7% in 2025 was two full percentage points lower than its average result in the seven years leading up to the bill's implementation.