SECTOR PERFORMANCE UPDATE
Brokers and P&C underwriters outperformed the broadmarket and other insurance sectors in Q1-2024
The S&P 500 increased 10.2% in the first quarter of 2024, building upon its 27.9% return for the trailing twelve months. Of the four sub-sectors tracked by Mercer Capital, two outperformed the market index in the first quarter (P&C and Brokers) while two (InsurTech and L&H) lagged the broader market.
The market capitalization weighted index of P&C underwriters rose 18.9% in 1Q24, led by Heritage Insurance Holdings, Inc. (HRTG, +63.3%). HRTG is a small-cap underwriter of personal and commercial residential insurance policies, primarily in Florida. The largest firms in the index, Progressive and Chubb, saw their stocks rise 29.8% and 14.7%, respectively.
The public broker index was up 12.3% in the first quarter and has risen 18.5% over the last twelve months. All seven members of the index reported positive returns in 1Q24, ranging from a high of 29.0% (Ryan Specialty) to a low of 8.7% (Marsh).
After posting a 40.8% return on the last twelve months, the Insurtech index moderated to an 8.7% gain in 1Q24. The top performer in the group was Root, the Ohio-based direct-to-consumer auto/home/renters insurance provider. Root’s stock price increased nearly five-fold in the first quarter. The largest firm in the index (Guidewire Software) rose 7.0% in 1Q24.
The Life & Health index, which includes both traditional life insurers and managed care companies, declined 0.9% in the first quarter of 2024. The decrease was principally attributable to a 6.0% decline for the largest constituent, UnitedHealth (UNH). UNH continues to monitor the fallout from the recent cyber attack on its Change Healthcare claims processing business.