Reinsurance stocks far outpaced the overall market in Q1 2018 despite significant under-performance by the world’s equities markets and insurance stocks, with reinsurers enjoying solid premium growth in spite of persistent soft markets conditions.
Evidence suggests that the 7.3% gain enjoyed by reinsurers can be partially attributed to ‘the pie getting larger’, as governments, corporations and other entities seek to narrow the protection gap between rising total economic losses and what had previously been covered by insurance.
All other industry sectors saw a fall in price. Property & Casualty (P/C) shares slipped fractionally (-0.2%) while multi-line carriers were down 1.3% and Life & Health insurers, the industry’s worst performing sector by a significant margin, tumbled 3.8%. Brokers outperformed, gaining 2.8%.
In relation to standard definition market types, U.S. insurance stocks gained 1.2% for the quarter, while developed market insurance shares lost 0.3% and emerging markets insurers were down 0.6%.
Performance between geographic regions was particularly desperate Americas’ (excluding U.S.) insurance shares rose 2.9%, but Asia Pacific insurers fell 3.7%. Chinese life insurers, under greater pressure from the new regulatory regime, dominated the biggest loser tables.
Contrasts between the first quarters best and worst performers was well above average, with 12 insurance stocks up more than 20% in the period, led by takeover targets XL Group (up 58%) and Validus (up 45%), as well as more than 30 with double-digit declines.
