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Weekly News Roundup, November 3

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In this week's news will talk about how Hippo Insurance lays off 20% of workforce, Allstate, Allianz invest $265 million in Next Insurance in a big bet on insurtech, and much more...

Allstate, Allianz invest $265 million in Next Insurance in a big bet on insuretech

Allstate and Allianz are making a sizable bet on the digital transformation of the commercial insurance market with a $265 million strategic investment in Next Insurance, an insuretech startup focused on the small business market.

For Next, which serves over a half million customers and is nearing $1 billion in premium revenue, it’s the largest equity round in its history, eclipsing a previous round of $250 million. The deal is also the largest in the insuretech space this year, according to PitchBook.

“There’s a massive opportunity with 30 million-plus small business owners in the U.S.,” said Guy Goldstein, CEO and co-founder of Next Insurance. He also pointed to a growing class of younger, in business for less than 15 years, and new entrepreneurs that want access to digital processes.

State Farm says catalytic converter theft claims are plummeting

State Farm has reported a decline in catalytic converter theft claims in the first half of 2023.

According to the company’s latest data, there were approximately 14,500 claims related to catalytic converter thefts during this period, marking a significant drop from the 23,570 claims made in the same period last year.

In the first six months of 2022, State Farm said it paid $50 million in catalytic converter theft claims. This year, however, the amount has decreased to $41.7 million.

This reduction in catalytic converter theft claims marks the first decline for State Farm since 2019, when only 2,500 claims had been reported

Hippo Insurance lays off 20% of workforce

Personal lines insurtech Hippo Insurance (Hippo) has laid off 20% of its workforce, or approximately 120 employees, effective November 1, 2023.

The move, which comes days before the company is due to announce its third quarter financial results, is a bid to “drive efficiency and increase focus on its strategic priorities,” Hippo said in its latest SEC filing. It notified most of its affected staff about the cuts on October 26, 2023.

The jobs reduction follows Hippo’s decision to pause all new nationwide business from August 2023.

The Israeli-founded carrier announced an initial round of layoffs in September 2022, which saw 70 employees, then 10% of its workforce, laid off.

Gallagher completes acquisition of Eastern Insurance Group

Arthur J. Gallagher & Co. has officially completed the acquisition of Eastern Insurance Group LLC, a subsidiary of Eastern Bank located in Natick, Massachusetts. The move is part of Gallagher’s strategy to expand its insurance and risk management service offerings in around 130 countries.

Eastern Insurance Group offers commercial property/casualty and personal lines products as well as employee benefits consulting to clients throughout the Northeast US.

The previously disclosed acquisition was first revealed in September when Gallagher signed a definitive agreement for the acquisition.

AIG publishes earnings report for Q3 2023

American International Group has published its earnings report for the third quarter of 2023 – a period in which the global insurer delivered “exceptional” financial results, according to chair and chief executive Peter Zaffino

In a release, AIG noted: “The increase in AATI was due to higher underwriting income in general insurance, higher net investment income, and better results in other operations, partially offset by an increase in adjusted income tax expenses as well as an increase in non-controlling interest expense due to the Corebridge secondary offering.”

The company’s general insurance business posted an 82% increase in adjusted pre-tax income for the quarter, while life and retirement saw a 24% jump. Other operations, however, suffered an adjusted pre-tax loss, albeit the figure was smaller compared to the loss a year ago.