$71B Losses Go Uninsured: Climate Stress or Revenue Play?

Good morning, ! This week we’re covering the P&C industry’s best quarter in nearly two decades, the slowdown in U.S. job momentum, sharper bets in insurtech M&A, Third Point’s $3B life reinsurance pivot, and how climate stress tests are reshaping capital requirements.

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DATA DIVE

Stress Testing the Green Pivot

Insurers are facing a capital reality check: EIOPA’s latest proposal adds +17% capital charges for fossil-fuel equities and up to +40% on corporate bond spread shocks. While the system-wide solvency impact is small, it’s a clear directional shift—transition risk is now being priced.

And portfolios aren’t ready. Just 5.7% of corporate bonds held by insurers qualify as green. Meanwhile, $71B in annual losses go uninsured, offering both a risk and a revenue play. The winners? Those with credible asset tilts, impact underwriting, and public-private muscles. For M&A teams, expect valuation dispersion based on how well a target’s book can weather the next climate policy shock.

Read the Full Report HERE

TREND OF THE WEEK

Best Q2 Since Myspace Was Cool

The P&C industry just logged its strongest second quarter in 18 years, posting a combined ratio of 94.2%. Translation: carriers actually made money underwriting—$12.9B, to be exact. That’s an $18B swing from last year’s losses. What drove the glow-up? Fewer catastrophes, personal lines finally priced right, and a juicy $3.2B reserve release. This cocktail delivered the second-largest quarterly underwriting profit since 2001. Yes, hurricane season looms, but with a cushion this thick, P&C feels more like a well-capitalized fortress than a leaky umbrella. (More)

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MICROSURVEY

DEAL OF THE WEEK

Malibu Moves to Mayfair

Third Point Investors just closed its acquisition of Malibu Life Re, marking a full pivot into life and annuity reinsurance. The deal—structured as an all-share transaction—hands Malibu Life Holdings 95% of the consideration shares, totaling 1.87 million ordinary shares. Critics weren’t quiet. ISS, Asset Value Investors, and Staude Capital raised red flags on governance and minority exit risk, citing founder Daniel Loeb’s 25% voting clout. Still, TPIL’s playing the long game: Malibu brings a $3B quota-share agreement, and a shot at the $1T US fixed annuity market. Next up: executing on its plan to grow to $5B in premiums by 2027—with London watching. (More)

INSURTECH CORNER

Fewer Deals, Sharper Bets

Insurtech M&A is cooling—but it’s not flatlining. Deal volume fell from 91 in 2023 to 63  in 2024, but the message isn’t retreat—it’s refinement.

Tech platforms continue to dominate the landscape, accounting for 42 of the 63 deals, signaling sustained demand for backend enablers and embedded solutions. MGAs and intermediaries saw smaller deal counts (5 and 9, respectively), while digital insurers clocked in at 7. The pattern is clear: scale, not sizzle, is the new investor metric.

The following chart  suggests the dry powder is still there—but investors are targeting firms with durable moats: AI-native workflows, health benefit integrations, and data-rich verticals. Series B/C rounds are rebounding, especially in markets with regulatory tailwinds or proven cross-sell leverage.

Why it matters: For incumbents, platform M&A is the fastest route to AI enablement. For startups, pure distribution plays are losing heat unless bundled with tech defensibility. For everyone, the “growth at any cost” era is over—capital now chases ROI, not runway. (More)

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MACROECONOMICS

Not Hiring, Not Firing (Yet)

Turns out, America didn’t hire as many people as we thought. The Bureau of Labor Statistics quietly revised job gains down by 911k. While headline unemployment remains tame at 4.3%, the real story is in the payroll momentum collapse—and it’s not pretty. June job numbers fell outright, and July/August were well below forecasts.

Firms are in a “low hire, low fire” holding pattern: no aggressive expansion, but no mass layoffs either. Immigration curbs are tightening labor supply, dragging GDP growth and redefining breakeven job creation. In the short term, AI investment props up GDP. But if SMB layoffs start this fall, recession watch goes from “meh” to “uh-oh.” (More)

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TWEET OF THE WEEK

"Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit."

Conrad Hilton