US and European P&C insurance benchmark indices posted gains in August with equities buoyed by continued investor optimism even amid uncertainty surrounding the Delta variant of the coronavirus.

Stocks

  • P&C benchmarks outperform in August
  • Scor adds 10.2% to lead gains in Europe
  • AIG and ProAssurance surge on Wall Street
  • Insurtech stocks falter in August sell-off

The US-based S&P 500 Insurance and European Stoxx 600 Insurance indices of top (re)insurance shares both advanced over August, adding 6.6 percent and 4.2 percent respectively.

The gains pushed the US insurance benchmark to a 23.8 percent gain for the year to date while the Stoxx 600 Insurance has risen almost 11 percent over the same period.

The month-to-month gains saw the insurance benchmarks outperform the broader market composites, with the S&P 500 up 2.9 percent and Stoxx 600 up 2.0 percent.

The overall increase in the insurance-specific indices reflected broad gains across individual stocks with 55 out of 73 P&C insurance stocks reviewed by The Insurer posting gains over the course of July.

However individual stock movements on both sides of the Atlantic varied significantly, affected by earning releases and market developments.

In Europe, Paris-headquartered big four reinsurer Scor led the gains with a 10.2 percent increase in its share price in August. The month-to-month leap marks a significant turnaround for the stock, which fell 12 percent over July after the reinsurer missed analyst consensus with a higher-than-expected Q2 combined ratio.

Hannover Re and European giant Zurich also had a good month with both stocks posting increases of 9.9 percent.

Munich Re and Axa were also notable gainers over August, posting increases of 5.4 percent and 4.2 percent, respectively.

On the other side of the spectrum, Axa and Zurich peer Allianz saw its shares sink more than 5 percent after the German giant said the US Department of Justice was investigating its Structured Alpha funds, after investors suffered significant losses during the pandemic-related market downturn early last year.

The pattern was repeated on the other side of the Atlantic, with an array of both positive and negative share price movements for US P&C stocks in August, albeit more skewed towards the green.

AIG was among the notable gainers last month. Its stock gained 15.2 percent over the trading period to close at $54.56 on 31 August after it beat analyst expectations with a 13.5 point improvement in its general insurance combined ratio and a 3.8 point improvement in the underlying combined ratio for the second quarter.

Its shares were lifted further after president and CEO Peter Zaffino expressed confidence to analysts that the firm’s general insurance division would achieve a sub-90 percent accident year combined ratio (excluding catastrophes) before the end of 2022.

The biggest riser by far was medical professional liability and workers’ compensation specialist ProAssurance, which saw its share price soar by 25.7 percent after it comfortably outperformed analysts’ consensus by posting a second-quarter profit in each of its operating segments.

HCI Group, Palomar Holdings and American Financial Group were also notable gainers with rises of 11.1 percent, 10.3 percent and 9.1 percent respectively.

Going the other way, insurtechs were particularly negatively impacted. San Francisco-based Metromile saw its share price plummet 43.6 percent over August after the auto insurtech revised its guidance for the year following a 24.4 percent increase in its loss ratio and a drop in its contribution margin for the second quarter of 2021.

Peers Root and Lemonade were also affected in August with their share prices shedding 15.5 percent and 13.2 percent respectively, having already deteriorated in the first half of the year.

Completing the picture, trading in global listed brokers was most notable for the movement of share prices following the announcement that Arthur J Gallagher is to acquire Willis Re in a $4bn deal, despite the breakdown of the Aon-Willis Towers Watson (WTW) combination.

Shares in Aon closed 20.3 percent higher for the month while WTW and Marsh McLennan added 7.1 percent and 6.8 percent respectively. Mid-cap broker Brown & Brown gained 6.7 percent over the period while Gallagher registered a more modest rise of 3.1 percent.