Incline working with Barclays to raise capital as targets $1bn volume in 2022

Incline P&C is seeking to raise additional capital as the insurance program market services firm looks to grow to around $1bn of premium volume in 2022 and acquire an E&S carrier after recently adding programs with insurtechs Hippo and Root, The Insurer can reveal.

In an interview with The Insurer, Incline president and CEO Chris McClellan said his company now has over 45 programs in its portfolio.

“We are estimating just barely over $600mn in volume this year,” he said. “And with those programs, and some expected growth because a number of those programs have just started in the third quarter so we are not getting their annualised volume, we should get very close to, if not over, $1bn next year.”

Incline is looking to raise money in the next few weeks and has engaged Barclays plc as its investment banker. 

“We are not looking to sell everything, we are looking to raise money,” McClellan said. “Right now, Incline and all of our companies are primarily owned by four individuals. I am one of them, and I have three investment partners and we have been together since 2015. So we are out there, we are going to start talking to a variety of potential investors – it could be reinsurers, insurers, private equity, family investment shops. We are open.”

The four individuals – the other three of which are Andy Thomas, John Martin and Robert Alpert – currently own about 90 percent of Incline, with the rest owned by a number of smaller investors and insurance company Agricultural Workers.

In late 2019 and early 2020 Incline acquired two insurance carriers – Worth Casualty Company, which was owned by Agricultural Workers, and Danielson National Insurance Company, which was owned by Catalina.

At the time those acquisitions were announced, the investment partners added $57mn in capital resulting in Incline having a combined $67mn in policyholder surplus. At that point, Incline said it underwrote approximately $60mn of annual program business. Also at that time Incline had about 25 employees, a figure which is now up to 45. 

When it announced the two acquisitions, Incline said that it expected to add an E&S carrier in either Q4 2020 or Q1 2021.

“That did not happen because of Covid,” said McClellan. “We were going to go out and raise money earlier. Part of the desire with this capital raise – and we are looking for a pretty significant capital raise – would be to acquire and put in place an E&S carrier.”

He added: “We started looking at it last year but we had so many admitted opportunities coming to us that we said let’s stay here for this year while we are growing and then we will be looking at it for 2022.”

Hippo and Root programs

McClellan said Austin, Texas-based Incline has 22 new programs under contract this year. One of these is the partnership with insurtech Hippo announced last week. Hippo’s homeowners program will be offered through Incline’s distribution channels. 

“It is one of 45 but it has obviously got a large volume based on what they are going to do,” McClellan said of the Hippo partnership. “We are projecting certainly tens and tens of millions of dollars over probably 30 states ultimately.”

McClellan noted that Incline will be another platform for Hippo in addition to Spinnaker, which the insurtech acquired last year. This will allow Hippo to offer two filings in a number of states. 

“They intend to probably start writing in Q4 this year,” McClellan said. “It will be a measured growth – they are not just coming in and dumping a lot of business with us. But we are projecting somewhere north of $50mn next year with Hippo.”

McClellan said that Incline has also recently agreed a deal with another insurtech, partnering with Root for auto business in Texas. He said other programs that Incline has added include an auto program in Texas with The Hartford and a flood insurance program with Brown & Brown subsidiary Wright National Flood. 

McClellan noted that Incline also has a pet insurance program that it is starting. 

In July, the company announced that its hybrid fronting carrier Incline Casualty Company had agreed a partnership with CRC Group’s 5Star Specialty Programs to provide its paper to the transportation-focused MGA to extend its public auto program offerings.

“So we have a lot of irons in the fire,” McClellan said. 

Incline’s programs cover lines including homeowners, private passenger auto, commercial auto, pet insurance, flood insurance and workers’ compensation. 

“Most of our lines are going to be commercial or personal short tail,” McClellan said “We are not going to do a lot of long-tail business, although our door is open.”

Incline keeps up to 20 percent of the risk with various programs, although McClellan noted: “It is not a guarantee – it is on a program-by-program basis.”