Important Announcements in the Insurance Industry

Chubb Announces its Estimated Net Global Catastrophe Loss

Yesterday, insurance provider, Chubb (CB) announced that its estimated net global catastrophe loss will total $1.8 billion during the second quarter. The property-and-casualty giant announced its projection ahead of its earnings report scheduled for later this month. This number was mainly due to COVID-19 economic fallout, but civil unrest in US cities also contributed to the calculation. Though the catastrophe loss is high, it is not as dramatic as some investors feared it might be.

Initially, analysts predicted losses of $80 billion or more for the insurance industry as a whole due to the pandemic. Now they expect losses will be somewhere between $40 billion and $70 billion.

Insurance industry investors have been wary recently due to unprecedented uncertainty. With this new benchmark from Chubb, investors have more information to use in making decisions. As investors gain clarity from Chubb’s announcement, the insurance industry is also making headlines this week with two multi-billion dollar acquisition announcements.

KKR To Buy Global Atlantic Financial Group

Private equity firm KKR (KKR) has made a deal to acquire Global Atlantic Financial Group, a retirement and life insurance company with over two million policyholders. KKR will pay about $4.4 billion for its new acquisition through a combination of proceeds from potential minority co-investors, cash, and debt or equity. KKR already manages assets worth $26 billion on behalf of insurance companies.

The deal is expected to close in the beginning of 2021. Global Atlantic will keep operating separately from KKR under its Chairman and CEO, Allan Levine.

Allstate to Acquire National General Holdings

In other insurance industry news, Allstate (ALL) announced it will buy fellow insurer, National General Holdings (NGHC) for about $4 billion in cash.

When the deal closes, Allstate will add more than 42,000 independent insurance agents to its team. Many insurance companies have shifted away from hiring as many agents as they used to, given the fact that younger people are buying insurance online. However, the purchase shows Allstate’s belief that there is still an important role for in-person insurance sales. This points to a long-term post-pandemic business plan.

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