Happy New Year! 2024 is in the books…but here’s a quick recap of the 4th Quarter.
The U.S. insurance industry proved it could weather the storm – both figuratively and literally. P&C insurers saw premiums soar 12% in the first half of 2024, with personal lines leading the charge. Life and health insurance stayed steady, supported by solid credit fundamentals, while reinsurers enjoyed a bit of a rate breather with property-catastrophe reinsurance prices dipping about 5%. Brokers had plenty to celebrate with premium growth of 10-15% thanks to inflation-driven valuations and some savvy capacity management.
Still, Mother Nature kept things interesting with insured losses from natural disasters hitting a whopping $60Bn in the first half of 2024 – well above the 10-year average. Some insurers said “no thanks” to high-risk states, opening the door for niche players to step in with specialized products. Even with these challenges, the industry flexed its adaptability and came out ahead, proving that it’s ready for 2025.
While certain segments of the market saw improvement and the industry overall with respect to P&C has seen improvement, capital adequacy and reinsurance markets will continue to be tested. The wildfires in the Los Angeles area will prove to be a headwind for regulatory matters, coverage accessibility and affordability that most could yet again feel beyond the impacted area. It is estimated that the economic losses in California thus far may be $250B, exceeding that of Hurricane Katrina at $200B.
Looking to the future, the industry is shaping up for an exciting year of growth and change. Global premiums are expected to grow steadily, with property and casualty insurers benefiting from better underwriting and higher investment returns, while life and health insurers focus on using AI to make processes faster and more customer friendly. Reinsurers are in for a stable year, and brokers are upping their game with new digital tools to meet client needs. Expect plenty of mergers and acquisitions as investors stay busy. Meanwhile, InsurTech is transforming the scene with carriers and MGAs using tech to improve efficiency and keep customers happy.
Overall, 2025 looks to be a year of opportunity, innovation, and tackling challenges like litigation costs with fresh strategies.
Trump Impact on the Insurance Industry

As a new Trump administration looms in 2025, the insurance sector may face familiar yet significant shifts. During his earlier presidency, Trump’s policies focused on deregulation, tax cuts, and economic stimulus, trends that could re-emerge with renewed vigor.
- Inflation & Tax Cuts – Inflation remains to be a hot debate that directly impacts insurers: Many expect the inflation control measures to boost insurer profitability and reduce claims and loss costs, while others argue a combination of high consumer spending, rebound in wage growth, and immigration-related labor cost increases might result in an inflated economy. Proposed tax cuts may again stimulate entrepreneurship, increasing demand for business insurance.
- Onshoring Trends – Onshoring initiatives, similar to those encouraged previously, might reshape risk pools by shifting operations closer to home.
- Regulatory Relief and Interest Rates – Easier regulations and a lower interest rate environment could encourage innovation and bring more investment into insurance technologies and services. However, low rates might also challenge investment returns for insurers.
- Transparency Requirements – In Texas, transparency mandates proposed by the Department of Insurance reflect a push for consumer trust but could increase administrative burdens, echoing past debates on regulatory balance.
- Affordability Concerns – Addressing pricing issues may lead to a focus on secondary peril mitigation, construction resiliency, and underwriting diversification. However, challenges like litigation abuse and outsized awards, especially in trades like roofing, remain unresolved.
The insurance industry will need to navigate a blend of federal and state-level changes in 2025, with implications varying across market segments. Insurers may find opportunities in balancing deregulation with consumer advocacy, leveraging renewed economic momentum to innovate and adapt. Collaborations with industry associations will be critical, as will strategic responses to both federal and state legislative shifts to navigate this evolving landscape effectively.
2024 Closings
In 2024, the Veritex Insurance Banking team successfully executed on its mission to be a trusted advisor, lender, and ancillary banking service provider with a broadened outreach to the insurance industry in closing numerous transactions including the following highlighted ones:



Interest Rate Update
Last year went out with a bang, with the Fed cutting rates by 100 bps over three meetings, including 25 bps in December, while at the same time the 10-Year Treasury rocketed 100 bps, including an increase of nearly 50 bps in December (chart below, courtesy Bloomberg). The saying states that what goes up, must come down…but when? According to the forward curve, not this year!
10y Treasury, Jan ’24 to Jan ‘25

Evidently, the market is more concerned about persistent inflationary pressures than the Fed, at least by the looks of the long-term Treasury market and the forward curve. While the December Fed dots chart (see below, courtesy of Bloomberg) indicates two expected cuts by the Fed in 2025, the market is currently only pricing in 1 full cut in June 2025, with a second cut not fully priced in until December…OF 2026! Also interesting to note on the Fed dot plot is that the terminal or ‘Longer Term’ rate expectation has been climbing over the past few updates. In December of 2023, the ‘Longer Term’ projection was rooted solidly at 2.50%, as it had been since early 2019. In June of 2024, the longer term projection drifted upwards to 2.75%, and as of the most recent meeting you can see that it now resides at 3.00%. Tacit acknowledgement by Fed governors that stubborn inflation will be harder to beat than expected, or just a vagary of the projection process? I’ll leave that to the reader’s discretion.
Fed Dot Plot, 12/18/2024

I guess the good news right now is that if you are a net investor, while the very short end of the curve has indeed dropped 100 bps following the Fed rate cuts, rates on 2y and longer instruments have retained much of their yield throughout the rate cutting process, and the forward curve has actually reverted to a more normal, upward sloping yield curve with the yield differential between the 10y and 2y hovering around 40 bps, a level not seen since May of 2022 (see chart below, courtesy Bloomberg). In fact, the 20y Treasury just touched 5%, a yield not seen in the last 13 months.
This chart also has some interest from a traditionally predictive power perspective – you may be aware that historically a yield curve inversion (technically indicated when the 2y Treasury yield is higher than the 10y Treasury yield – see red sections in the chart below), has been highly indicative of a pending recession, which typically occurs within 6-18 months of the initial inversion. I may be tempting fate, but we are well over 2 years into the inversion and with no or limited data pointing to a pending recession, it seems we may have escaped the historical snare.
2y vs 10y Yield Spread Analysis, 5y Term

To add to the challenges of the current market, we are hearing differing opinions from the Federal Reserve. Federal Reserve Governor Christopher Waller recently said he believes inflation will continue to cool toward the central bank’s 2% target, and that he is supportive of additional interest-rate cuts this year. Federal Reserve Bank of Richmond President Tom Barkin recently indicated that there are still upside risks to inflation and growth, underscoring his preference to keep interest rates restrictive for longer.
And finally, economic reports continue to be challenging to predict with any accuracy. For example, ISM Manufacturing was expected to decline slightly from last month, but ended up increasing while still remaining in a range indicating contraction vs. expansion. ISM Services numbers surprised materially to the upside, with the prices paid index expected to slide from 58.2 down to 57.5, while actually increasing to 64.4. All eyes now turn to the employment report, where non-farm payrolls are expected to slide to $165,000 from last month’s $227,000, and the unemployment rate is expected to hold at 4.2%.
Throw into the mix a new President being inaugurated this month whose policies are expected to be inflationary and leaning toward stronger growth, and who also seems to be a magnet for controversy and we seem to have a nearly perfect tangle.
All Things Golf

The start of the new PGA Tour season means many things for players; a new start, new sponsors/equipment, and, in many cases, new contracts. For the entities that sponsor players, it also includes a renewal of insurance policies.
Golf sponsorship contracts aren’t that different than what you hear about for coaches and athletes in other sports. Typically, there is a base component and performance incentives. Behind the scenes, companies, sports teams, and athletic departments often seek insurance for lofty bonus clauses.
The insurance clauses offer two main advantages. One, the ability to offer a player more upside, and, in a sport like golf, essentially bet on themselves. More importantly, the emotional capability to constantly root for a player’s best performance instead of positive results wrecking a bottom line.
As Veritex releases its 2025 list of players, a group we are excited to announce, we are fully invested in seeing their best results week in and week out. The list of Veritex’s Golf Ambassadors can be found here.
On the Road Again

As every year winds down, we find ourselves in a season of gratitude, giving, and precious moments with loved ones. Amid this festive time, we were also fortunate enough to indulge in hunting season. The Insurance Banking Team recently hosted a premier duck hunt at Fowler’s Point in Southern Arkansas hosted by Veritex Golf Ambassador David Toms. The group was also joined by Chandler Phillips and guided by none other than Rusty Creasey, world-renowned duck hunter and Realtree Ambassador. This was a fantastic way to transition into the holiday season!
Our calendars are marked for Jan. 26–28 to reunite with our agency friends in Austin, Texas, for IIAT’s 62nd annual Joe Vincent Seminar. This year’s seminar promises to delve into one of the insurance industry’s hottest topics: AI. We’re eager to discover how AI is revolutionizing the field and shaping the future of insurance.
We love connecting with new people in the insurance space and learning their stories. If you know anyone we should meet, please feel free to share this message or make an introduction to anyone on our team. We’re particularly interested in meeting business owners, lawyers, accountants, operators, and fellow bankers working in the insurance industry. The best way to reach us is through email – we’d greatly appreciate your referrals.
Thanks for keeping up with us and we’ll see you at the end of Q1!