US insurance composite falls 1.9% in worst week for S&P 500 since late May

By Carlos Pallordet

(The Insurer) - All 12 industry groups in the North American insurance composite compiled by Stonybrook Capital and Weild & Co retreated last week following a sharp sell-off on Friday, driven by escalating trade tensions with China.

The S&P 500 index was down 2.3% for the week while the Dow Jones Industrial Average and the Nasdaq-100 fell 2.7% and 2.3%, respectively.

Meanwhile, the small-cap Russell 2000 index lost 3.3% in the week to Friday.

Stonybrook-Weild noted that the Dow Jones Transportation Average was down 4.9% for the week, “possibly signaling a recession ahead, although the economic data is muddied by the shutdown which deprives the Fed (and the public) of consistent data from the Bureau of Labor Statistics”.

The investment banks highlighted the impact on equity markets of escalating trade tensions between China and the U.S. On Thursday, China announced restrictions on rare earth mineral exports, while on Friday the U.S. imposed an additional 100% tariff on Chinese imports and introduced export controls on critical software.

In reaction, the Dow Jones Industrial Average fell 1.9% on Friday, the S&P 500 dropped by 2.7% and the tech-heavy Nasdaq Composite dropped 3.6%.

Stonybrook-Weild also noted that the odds of resolving the government shutdown by October 15 appeared low, according to decentralised prediction market platform Polymarket.

According to the platform, odds for a resolution of the shutdown by October 31 stand at 57% and 95% by November 30.

“People are betting that Congress doesn’t want a government shutdown to wreak havoc with Thanksgiving,” the investment banks said.

“In fact, we should expect the rhetoric to escalate to fevered pitch as we get into November and federal workers need the cash flow to buy turkeys with all the fixings,” they concluded.

In the North American insurance composite, decliners led advancers by 85 to 27.

The two worst-performing groups were title insurers, down 8.1%, and standard commercial insurers, down 3.4%.

Among the latter, leader Travelers recorded the largest fall, with its shares down 5.1% for the week. Hanover Insurance and The Hartford were down 3.4% and 3.3%, respectively.

Cincinnati Financial fell 2.6% while Selective Insurance lost 2.1%.

The group of personal lines insurers was also among the worst performers in the composite, with the cohort down 2.8% in the week.

Progressive and Allstate – the two largest companies in the group by market capitalisation – fell 2.3% and 2.8%, respectively.

Insurtechs Porch Group and Lemonade experienced the largest falls in the cohort, trading down 12.1% and 11.9%, respectively. Meanwhile, Root was down 6.2% while Hippo lost 5.2%

Mercury General was also among the largest fallers in the cohort, closing down 7.8% for the week.

Among reinsurers, Everest Group and Reinsurance Group of America both fell by 2.8%.

RenaissanceRe eked out a 0.3% gain while Greenlight Capital and SiriusPoint dropped 1.0% and 0.8%, respectively.

Shares in Conduit Holdings fell 0.2%.

Global brokers, alongside micro-cap insurers, emerged as the best-performing group, with shares slipping by just 0.4%.

The performance was driven by a 2.9% weekly gain for Marsh McLennan.

The other three constituents all ended in negative territory with WTW and Arthur J Gallagher dropping 2.9% and 2.8%, respectively, while Aon traded down 1.0%.

The Stonybrook-Weild North American Insurance composite is up 4.8% year-to-date.

In this article, we have included a selection of industry comp tables published in full by Stonybrook and Weild & Co in their weekly update.