P&C Insurance Industry, Part 2

Part
01
of four
Part
01

P&C Insurance Industry: AmTrust Financial SWOT

AmTrust Financial strengths include its strong distribution network, loyal clients, strong free cash flow, and strong online presence. The company is threatened by competition and political uncertainties.

Strengths

  • The company has a strong distribution network. The firm has 29 offices in different locations in the U.S. This enables it to be able to avail its products to a large customer base in a timely manner.
  • AmTrust Financial has loyal clients. The company has been able to develop a strong relationship with its agents that help to provide additional clients. It currently has 9,500 agents.
  • The company has an excellent return on capital expenditure. The execution of new projects for the company has been relatively successful and this has helped build new revenue streams and thus generate returns on capital expenditure.
  • The company has a strong free cash flow. This helps the company to expand to other projects.
  • The firm has skilled, qualified, and accredited professionals. AmTrust Financial has spent its resources on training and motivating its employees.
  • The company has a strong online presence. It has thousands of followers on Facebook, Twitter, and Instagram. It also has an interactive website that draws sales and internet traffic.

Weaknesses

  • The company is not good in merging businesses with different work cultures. Although it succeeds in combining small businesses, it has its share of failure to combine companies with different working culture.
  • AmTrust Financial takes longer to buy and sell goods than the industry average. The company, therefore, adds up costs that are unnecessary. This is because the company is not good at demand forecasting.
  • A large proportion of property owned by the company is leased. This increases the costs it incurs due to large amounts of rent.
  • Financial planning of the company is not being carried out adequately and effectively. The current low levels of assets when compared to liabilities may create liquidity problems.
  • Centralized decision-making is time-consuming. Certain officials need to approve team decisions, this reduces efficiency and innovation in the firm.
  • The current organization structure limits expansion to other products. This is because the current structure is only compatible with the current business model.

Opportunities

  • The new trends and growth of the e-commerce industry present an opportunity to AmTrust Financial. The company can increase its revenue by investing in e-commerce.
  • An increase in the number of internet users and social media users, present the company with an opportunity to interact with its customers and promote its products.
  • Technological advancements present an opportunity for the company. It can automate its services and collect data from its customers to improve its marketing efforts.
  • There has been an increase in consumer spending. This can result in "growth in AmTrust Financial Services’s target market with new customers that can be attracted towards the business".
  • The low inflation and the projected stagnation of inflation can help the company's input costs to remain low.

Threats

  • The increase in competition in the industry may result to low prices. This will reduce the company's revenue because it will also be forced to reduce prices.
  • The numerous new entrants in the market are gaining market share. This is a threat to the company as it might lose some of its customers to the new entrants.
  • Political uncertainties "prove to be a barrier in business". This might hinder performance and make the company to lose incur unnecessary costs.
  • Increase in substitute products. This might lead to a decrease in consumption of present products.


Part
02
of four
Part
02

P&C Insurance Industry: RLI Group SWOT

RLI Corp is a strong insurer with a reputable company culture and robust earnings history. Its main weaknesses are industry-wide issues like vulnerability to natural disasters and increased competition.

Strengths

  • RLI's strengths lie in its "entrepreneurial culture". This means encouraging their underwriters to grow and expand RLI's portfolio through intelligent risk-taking.
  • As such, RLI has extremely high employee satisfaction, ranking 4.9 stars out of 5. 99% of reviews would recommend the company, which is extremely high for both the industry and a company of its size/scope.
  • RLI also boasts technology, distribution channels and reinsurance relationships as its assets.
  • The company has maintained an A+ financial rating for a long time, underpinning its financial successes. This means the company has the financial strength to offer customized approaches in unique situations.
  • The company has a strong capital structure, according to financial experts, continually enhancing shareholder value.

Weaknesses

  • RLI uses local branch networks, meaning its workforce can be vulnerable to local conditions. This could potentially also create a disparity in quality.
  • Seeking Alpha identifies that from an investment point of view, RLI Corp is over-valued. This means that although the company has a 44-year dividend growth history, there are vulnerabilities to its valuation if market conditions should change.

Opportunities

  • RLI Corp is expected to report YoY earnings increase. As such, its stock price will likely rise, resulting in increased investment and stakeholder confidence. This means RLI Corp will have opportunities to invest and expand.
  • As RLI Corp invests heavily in technology, it creates further market opportunities for itself in addition to saving expenses. For example, its new digital accident kits enable users to report claims electronically and instantly. The company has opportunity to develop further tech-reliant claims capabilities for other segments of P&C insurance.

Threats

  • The insurance industry is consistently exposed to the threat of catastrophic natural disasters. Previous years have seen significant events, and natural disasters are difficult to predict.
  • Additionally, increasing expenses can always impact margins.
  • Competition from new market entrants is a constant threat to any P&C insurance provider, even in specialty/niche areas. For example, IIR has a news story on how technology is helping 'regular' insurers operate more and more specialty lines. For specialty insurers like RLI Corp, this means more companies in their market space.
Part
03
of four
Part
03

P&C Insurance Industry: Argo Group SWOT

Argo Group is a specialist insurer and underwriter, operating in niche insurance segments. However, it suffered recently due to reduced earnings and board/executive changes.

Strengths

  • Argo Group focuses on specialty, or niche, insurance. This means its offerings are more tailored and more specific to the business or industry.
  • For example, its casualty arm can successfully understand true liability to offer high occurrence limits.
  • Through targeted acquisitions, Argo Group can offer a wide range of specialized insurance. They frequently make headlines by insuring "weird stuff" like famous horse jockeys, Princess Leia or rock bands' concert performances.
  • The group has an excellent credit rating of A from A.M. Best and A- from S&P.

Weaknesses

  • Only 52% of employees would recommend Argo Group as a good place to work. 49% of 167 reviews had a negative experience working for the company.
  • This has led to complaints of high employee turnover.
  • Many complaints are about senior management and politics. The company changed its reporting structure just a few months ago, so it is evident they have some struggles in this area.
  • Additionally, increased competition in the insurance industry, even specialized insurance, is hurting pricing. Combined with increase loss costs, this makes profits slimmer.

Opportunities

  • Only one day ago, Argo Group named a new chairman and CEO. Interim CEO Kevin J. Rehnberg is confirmed permanently, while Thomas A. Bradley will become the new chairman. With new leadership, the company has opportunities to capitalize on fresh ideas and change.
  • Argo Group had been spending significant energy combating Voce Group, one its main investors. It finally agreed to make some changes to its board structure. This end to disagreement means Argo Group has more opportunity to now focus on growth strategies instead.

Threats

  • Conversely, since Argo Group only appointed a new permanent CEO and new chairman yesterday, there is a chance that the period of change could be disruptive to the company. For example, sometimes a new leader can make employees nervous or there can be an adjustment period at the company. New leadership can impact stock prices, which can impact future investment/growth possibilities.
  • Preliminary earnings estimates forecast YoY earnings declines, which of course threatens the company. It has been quietly selling some of its business units, which could severely limited Argo Group's competitive edge in being specialist-yet-wide-reaching.
  • The company is also under SEC investigation for its executive compensation. Among other things, this action has put Argo Group's current financial ratings under threat.
Part
04
of four
Part
04

P&C Insurance Company Tiered Contacts, Pt. 3

Barry Karfunkel is the chief executive officer and Nathan Feiner is the EVP Sales & Marketing, at National General Companies. The requested details for the listed insurance companies have been entered in rows 19-24 of the attached spreadsheet and a brief overview of our findings is presented below.

MAPFRE North America Group

NJM Insurance Group

  • Cam Maio is the assistant vice president — marketing & communications executive and he can be reached at cmaio@njm.com.

EMC Insurance Companies

Research Strategy

To obtain information about the most senior communications people at the assigned insurance companies, we leveraged data from the company websites, LinkedIn and various news articles and publications. Where we could not identify the company's chief communications officer, we added details for the chief marketing officer or the chief executive officer. We also added marketing contacts for companies that don't have a VP/SVP/EVP of communications or a director of communications. We couldn't find emails in the public domain so we relied on email finder and verifier tools such as RocketReach, Voila Norbert and Hunter.io.
We could not identify a Linkedin profile for match Livingston and Alfredo Castelo. After a thorough search of the Linkedin database, we were unable to identify profiles that match Mitch Livingston and Alfredo Castelo. Therefore, we have assumed that they do not have profiles on Linkedin.
Sources
Sources