Insurance stocks deliver solid performance in Q2

The ACORD Global Insurance Stock Index delivered an impressive 15.7% return during the second quarter of 2022, matching the robust performance of the global equity market, which saw a 14.2% return over the same period.

The economic landscape is currently marked by mixed news, leading to increased stock volatility and uncertainty about the global economy's future direction, ACORD said. Nevertheless, global insurers are reaping the benefits of strong underwriting fundamentals and significantly higher investment gains, driving double-digit returns across all segments.

While rising home prices, the cost of new and used cars, and insured commercial value contribute to higher claims costs, they also present opportunities for increased premium volumes, ACORD said.

Total return by sector

• Reinsurance: The sector is experiencing strong demand, sound underwriting results, and positive investment gains.
• Property and casualty: Rate increases, larger exposures, and investment gains are propelling revenue growth, but inflation and supply-chain issues are impacting costs.
• Multi-line: Substantive investment returns are being offset by catastrophe losses and increasing reinsurance costs.
• Life: The sector faces headwinds to higher returns due to its exposure to the commercial real estate market and the impact of rising interest rates on surrenders.

Total return by region

• LATAM and Caribbean: P&C profitability is driven by rate hardening and lower claims costs, while life revenue experiences mixed results with increased protection sales offset by withdrawals from accumulation products.
• EMEA: Negative economic pressures and the ongoing war in Ukraine contribute to uncertainty, yet the P&C and real estate sectors deliver strong returns.
• North America: Persistent inflation and the US debt ceiling debate dampen results, and Canadian P&C net income is affected by wildfire losses.
• Asia-Pacific: Regional insurers experience impeded returns due to broader market conditions, despite strong revenue growth.

Total return by market capitalization

• Large: Global specialty P&C and reinsurers lead with the highest returns, as four out of five large-cap insurers report positive year-on-year growth.
• Medium: Strong earnings growth drives double-digit returns for over two-thirds of mid-cap insurers.
• Small: The returns for small-cap insurers show a wide range, ranging from -44% to +169%, with four Middle Eastern carriers reporting returns above 100%.

Read next: ACORD surveys insurance professionals on future of industry

The ACORD Global Insurance Stock Index comprises publicly traded life, non-life, and reinsurance carriers with a market capitalization exceeding $250 million. This analysis evaluates quarterly and annual changes in share prices, adjusted for dividends and splits.

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