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Insurtech company tops list of fastest-growing US insurers


Insurance Underwriting Transformed How Insurers Can Harness Probability of Default Models for Smarter Credit Decisions


The World's Largest P&C Insurers, 2023


The Worlds Largest Life Insurers, 2023


Essential IR Insights Newsletter Fall - 2023

Insurtech company tops list of fastest-growing US insurers

It seems fitting that a year full of speculation about how insurtech startups might revolutionize the insurance business culminated with a company that employs a novel, data-driven approach to underwriting and pricing auto coverage ranking as the property and casualty industry's fastest-growing carrier.

Pay-per-mile personal auto insurer Metromile Insurance Co. generated growth in direct premiums written of 1,061% in 2017. It topped the list of U.S. domiciled P&C groups and stand-alone entities that generated growth of at least 33% in direct and net premiums written during the year from a base of at least $1 million in 2016 premium. Allied Trust Insurance Co., a Texas-domiciled writer of homeowners, auto, flood and umbrella coverage, ranked second based on the same set of criteria with growth of 742.3% in direct premiums written, and it led the industry with 685.7% expansion in net premiums written.

While rising private-passenger auto rates helped drive year-over-year increases in P&C direct and net premiums written in excess of 4.5% in 2017, growth was harder to come by in the life and annuity business. Several companies were able to produce outsized expansion nevertheless, even as direct first-year and single premiums plunged by 6.9% in 2017.

LifeShield National Insurance Co. and Investors Preferred Life Insurance Co. emerged as the fastest-growing entities on the basis of total-filed direct premiums and considerations. Our criteria included growth rates of at least 15% in both direct and net premiums and considerations, and 25% in direct first-year and single premiums from a baseline of at least $1 million in those three categories in 2016.

LifeShield is an Oklahoma City-based writer of life and supplemental health insurance. Investors Preferred, based in Rapid City, S.D., focuses on the sale of variable life and annuity products in the high-net-worth private placement space.

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A plethora of personal lines writers

Metromile was purchased as a clean shell in August 2016 as part of a strategic shift by a similarly named managing general agency that previously had been writing business on a third party's paper, which provided it with a substantial base from which to expand.

The MGA commenced operations in 2011 with a business model dependent upon the policyholder's use of a telematics device to track mileage. It had amassed nearly 28,000 in-force policies in seven states just prior to entering the acquisition agreement, with an intention to migrate them onto the affiliated carrier's books.

Metromile said in its 2017 annual statement that it was writing policies in the same seven states that the MGA had previously entered, producing $52.8 million in direct premiums written, overall. It generated premiums from an eighth state, Arizona, during the first quarter of 2018 as direct premiums written for that period rose to $19.1 million from $10.4 million a year earlier.

Peer startups like Root Insurance Co. and Lemonade Insurance Co. grew at even more rapid clips in 2017, ending the year with direct premiums written of $4 million and $9 million, respectively. Though they did not produce sufficient business in 2016 to qualify for inclusion based on the aforementioned criteria, their exponential growth in the first quarter of 2018 positions them well for future consideration.

Recently formed carriers focused on coastal property insurance business have frequently appeared among the rankings of fastest-growing P&C carriers over the years, and 2017 was no exception.

Allied Trust generated all of its direct premiums written in 2017 from the homeowners line in Texas and, to a lesser extent, Louisiana. Excalibur National Insurance Co., a Slidell, La.-based writer of homeowners, dwelling fire, commercial multiperil, allied lines, inland marine and other liability insurance, and Avatar Property & Casualty Insurance Co., primarily a Florida homeowners insurer, both generated growth well in excess of 100% in direct and net premiums written during 2017.

M&A activity served as one of the drivers of Avatar's 2017 expansion, and it also contributed to the rates of expansion achieved by certain other carriers that ranked among the P&C industry's fastest growing. Elements Property Insurance Co. merged with Avatar in May 2017. Elements' MGA contributed $65.2 million of the $91.8 million in direct premiums written reported by Avatar in 2017. Business generated by the company's affiliated MGA Avatar Management LLC fell to $26.6 million from $32.5 million in 2016. As such, it is not likely that Avatar would have generated sufficient expansion had its 2016 financials been restated to include results originally reported by Elements.

A comparable scenario landed an Illinois company among the fastest growing P&C insurers. A 2017 transaction that resulted in the formation of Frontier - Mt Carroll Mutual Insurance Co. had Frontier Mutual Insurance, an Illinois farm mutual whose results were outside of the scope of the annual statutory data, merge with Mt Carroll Mutual Insurance Co. While the combined company reported restated pro forma financials for 2016, limitations on the scope of that data means that S&P Global Market Intelligence continues to report on Mt Carroll Mutual as a stand-alone entity prior to the merger. On that basis, its net premiums written growth rate of 286.3% vastly exceeds the pro forma expansion of 11.9%.

A pending merger is likely to make one P&C group's inclusion among the fastest-growing companies a short-lived experience. Validus Holdings Ltd., which is selling to American International Group Inc., benefited from a direct premiums written perspective from the 2017 acquisition of the crop insurance business of agricultural conglomerate Archer Daniels Midland Co. Validus' growth is largely attributable to the shift of the ADM crop business from an ADM subsidiary's paper to that of the group headed by Western World Insurance Co. Retained crop business also contributed $56.3 million to the Validus U.S. P&C group's $228.7 million in net premiums written.

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Deals boost life insurers

M&A also played a role in shaping the list of 2017's fastest-growing U.S. life insurers.

The life group known as Global Bankers Insurance Group LLC has multiple acquisitions to its credit over the last four years. Another, a deal involving the immediate parent of Lincoln Benefit Life Co., remains pending.

While reinsurance transactions involving the assumption of certain annuities from Bankers Life Insurance Co., Motorists Life Insurance Co. and Grange Life Insurance Co. caused the group's net premiums to surge, Colorado Bankers Life Insurance Co.'s launch of a new multiyear guaranteed annuity provided a substantial lift to its direct writings. The company said it introduced the new product in November 2017 and generated $187 million of paid premium by year-end.

"Management intends to increase sales activity in 2018 in an effort to build future profits," Colorado Bankers said in its annual statement.

Kuvare US Holdings Inc., the owners of Guaranty Income Life Insurance Co. by virtue of an October 2016 acquisition, committed additional capital to help support the company's growth. Guaranty Income Life reported $112.1 million in direct first-year and single premiums in 2017, up from $41.2 million in 2016. The company said it directed its marketing efforts to support sales of its multiyear guaranteed annuity and annuity/long-term care combination products, and it is eyeing continued strong sales in 2018 thanks in part to the introduction of its first indexed annuity.

Kuvare's growth rate was artificially slowed by S&P Global Market Intelligence's inclusion of United Life Insurance Co., a company it acquired after the end of 2017, in the U.S. life group's historical totals. United Life, as a subsidiary of United Fire Group Inc., reported a year-over-year decline in single-premium whole life production.

The Nationwide Mutual Group was poised to make the rankings of the fastest-growing life entities either with or without the inclusion of Jefferson National Financial Corp., which it acquired in 2017. In fact, when consolidating the target's historical results with those of the acquirer, Nationwide's growth in direct premiums and consideration would have been higher on a stand-alone basis.

Large cases in the public sector retirement plan and corporate-owned life insurance businesses of Nationwide Life Insurance Co. boosted that company's premium volumes while a 75.8% increase in sales of fixed indexed annuities elevated results at Nationwide Life & Annuity Insurance Co.

An improved environment for annuity sales in 2018 could help make top-line growth less of an exception and more of a rule in 2018.