What brokers can anticipate from Gore Mutual in 2023

Having completed the foundational pieces of its Next Horizon business strategy, Gore Mutual Insurance company expects to be able to operate at a combined ratio in the range of 95% to 97% going forward into 2023 and beyond, the company’s chief executive told Canadian Underwriter in an interview.

Gore launched its Next Horizon strategy in October 2019. Foundational pieces include new technology (including the introduction of Guidewire, allowing real-time digital transactions in personal and commercial lines), acquiring new talent (including 200 new roles over the past three years), and new operational models (for example, new pricing and product models based on Guidewire technology).

All told, the company made $32-million worth of financial investments in its transition in 2022. Adjusted for these operational costs, the company’s 2022 year-end combined ratio was 97.3%. Unadjusted, the combined operating ratio was 102.8%.

A public statement issued by Gore indicates efficiencies unlocked by the Next Horizon strategy allowed the company to grow the company by more than 40% over three years – to $670 million of gross written premiums. The plan in 2023 is to raise gross written premiums to $750 million now that the foundational operating expenses of Next Horizon are basically finished, Gore Mutual’s president and CEO Andy Taylor told CU.

“Historically, during this transformation, we added about five to seven points of cost to the expense ratio,” Taylor said in a Teams call discussing Gore’s 2022 financial results. “Going forward, we want to take that cost back out and become even more efficient than we were before. Our target is to run on a recurring basis in that 95% to 97% combined ratio range…With that go-forward goal, we anticipate achieving that by the end of this year.”

Given the mutual model, a central way to achieve growth is through the growth of premium sales. Unlike publicly traded companies, a mutual can’t issue shares to raise capital. And so, Taylor was particularly pleased to see the industry’s wish for higher debt ceilings recently incorporated into the federal government’s Budget Implementation Act.

“There was an amendment to the Insurance Company Act that that we had advocated for with some of our peers,” Taylor explained. “Effectively, it allows for insurance companies to raise debt above…a previous limit of 2%. Now that’s a much higher threshold.

“That applies to all companies in Canada and not just mutuals. But it is particularly advantageous for mutuals that don’t have access to capital to the same extent as others. In the current environment, the cost of capital is very expensive. So, now [the budget amendment] is another tool we have available to us, as we explore access to capital in the coming years.”

With the foundational pieces for Next Horizon in place, what can brokers expect to see new things from Gore in 2023?

Look for three new things in 2023, Taylor responded.

In personal lines, Gore is looking at product expansion, particularly in group personal lines. It also anticipates launching a telematics (usage-based insurance, or UBI, solution), in the latter part of the year.

In commercial lines, with the introduction of Guidewire last November, the company has developed new products and pricing, which will be rolled out in 2023. Taylor didn’t provide specifics, other than to say brokers can expect “a really crisp focus on which class of [commercial lines] business we want to grow in.”