By Carlos Pallordet

Oct 1 - (The Insurer) - Insurance sector benchmarks underperformed the broader market on both sides of the Atlantic during September.

Global equity markets extended their upward momentum in September, supported by resilient corporate earnings and expectations of monetary easing. However, investor sentiment remained cautious due to persistent inflation pressures, trade policy uncertainty and the threat of a U.S. government shutdown.

In the U.S., the S&P 500 rose by 3.5%, notching its fifth consecutive monthly gain and bringing its year-to-date return to 13.7%. Growth stocks continued to outperform, led by communication services and technology.

Inflation remained sticky, however, with August’s core PCE index showing an increase of 0.2% month on month and 2.9% year on year. Despite this, the Federal Reserve lowered interest rates by 25 basis points at its September meeting, setting the target range at 4.00% to 4.25%. The decision reflected growing concerns over a weakening job market. Meanwhile, second-quarter GDP growth was revised upward to 3.8%, driven by stronger-than-expected consumer spending.

In Europe, the Stoxx 600 recorded its best September performance since 2019 with an increase of 1.5%.

However, regional equity indexes delivered mixed performances in September. Germany’s DAX edged down 0.1% while France’s CAC 40 traded up by 2.5%. In the UK, the FTSE 100 and FTSE 250 rose by 1.8% and 1.9%, respectively.

As in the previous month, Europe-listed property and casualty (re)insurers underperformed the broader market.

The sector-specific Stoxx 600 Insurance index declined by 0.3% in September, weighed down by losses for its two largest constituents, Allianz and Zurich, which were down 1.1% and 3.0%, respectively.

Munich Re – the fourth most heavily weighted company in the benchmark – also ended in negative territory.

Still, 13 of the 21 listed European (re)insurers tracked by The Insurer, delivered gains in the month.

London-listed Beazley was the standout performer, with its shares rebounding by 15.8% in September.

In August, it had topped the losses among Europe-listed (re)insurers with a fall of 12.4%. The sell-off came after the specialty insurer reported a near one-third drop in half-year profit and reduced its written premium growth guidance for the year.

Conduit Holdings posted the second-largest gain in September, climbing 13.7%.

However, the stock is still down 9.2% for the quarter and 27.2% year-to-date. The decline followed a late-July sell-off after the reinsurer reported a first-half comprehensive loss of $13.5 million and cut its full-year return on equity guidance.

In mid-September, when Conduit shares were hovering around their lowest levels, activist investor Richard Bernstein told this publication that “a sale of the business is almost inevitable because it is the cheapest quoted reinsurer in Europe and an attractive target”.

Lancashire recorded the third-largest gain across the European cohort in September, rising 10.5%. It is up 17.4% for Q3, above all other (re)insurers in the group.

Mapfre advanced 7.6% in September, extending the Spanish insurer’s year-to-date rally to 64.8%.

Meanwhile, Scor led the gains among continental reinsurers with a 7.1% surge in the month.

Other significant risers included Aviva, Hiscox and Gjensidige, which all added around 5% in September.

At the other end of the spectrum, shares in Admiral dropped 7.6% despite a strong recovery in the last two trading sessions of the month, while Talanx was down 3.9%.

THE PICTURE IN THE US

Across the Atlantic, performance among P&C insurance stocks was mixed, with most shares advancing but several large-cap (re)insurers ending the month in negative territory.

The S&P 500 Insurance edged up 0.8% in September but was down 1.2% for the quarter. In contrast, the broader S&P 500 gained 3.5% during the month and 7.8% over the third quarter.

Of the 46 carriers tracked by The Insurer, 26 advanced in September, with 12 rising more than 5%.

Newly listed Slide Insurance Holdings led September’s gains with an 18.0% rise, partially offsetting the 28.8% decline it suffered in August.

American Integrity, another recent entrant, rose 11.6%, adding to gains of 7.1% in August.

Meanwhile, coastal insurers HCI Group and Heritage added 15.1% and 10.6%, respectively.

Mercury General gained 9.6% in September, taking its Q3 rise to 25.9%, while Kingstone Companies added 9.2%.

Other significant risers included American Financial Group, Hippo and WR Berkley, all up around 7%.

At the opposite end, recently listed Accelerant and Ategrity posted the steepest declines, falling 25.7% and 12.7%, respectively. In August, Accelerant recorded the cohort’s second-largest loss with its shares down 27.2%.

Among the larger-cap companies, Kinsale Capital and CNA Financial fell 7.0% and 6.2%, respectively, while AIG dropped 3.4%. Arch Capital and Berkshire Hathaway also finished in the red, sliding 0.9% and 0.1%, respectively.

BROKERS’ PERFORMANCE

Among intermediaries, The Baldwin Insurance Group, which had led the gains in H1, fell 10.9% in September, extending its third-quarter decline to 34.1%.

This was followed by Brown & Brown, Aon and Marsh McLennan, which traded down 3.3%, 2.8% and 2.1%, respectively.

Ryan Specialty slid 0.3% in the month and was the second-largest faller of Q3 with a 17.1% loss.

In contrast, WTW and Arthur J Gallagher ended the month with increases of 5.7% and 2.3%, respectively.