Insurance stocks deliver solid performance in Q2

The ACORD Global Insurance Stock Index delivered an impressive 15.7% return in the second quarter of 2022, matching the strong 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, which has led to an increase in stock volatility and uncertainty about the future direction of the world economy, ACORD said. However, global insurers are reaping the benefits of strong underwriting fundamentals and higher investment returns, driving double-digit returns across all segments.

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

Total sector returns

• Reinsurance: The sector experienced strong demand, good underwriting results, and positive investment gains.
• Property and casualty: Rate increases, greater exposures, and investment gains are driving revenue growth, but inflation and supply-chain issues are affecting costs.
• Multi-line: Substantive investment returns are offset by catastrophe losses and increased reinsurance costs.
• Life: The sector faces difficulties in higher returns due to its exposure to the commercial real estate market and the impact of rising interest rates on surrenders.

Total regional returns

• LATAM and Caribbean: P&C profit was driven by rate tightening and lower claims costs, while life income experienced mixed results with increased sales of protection offset by withdrawals from accumulated products.
• EMEA: Negative economic pressures and the ongoing war in Ukraine contributed to uncertainty, although the P&C and real estate sectors delivered strong returns.
• North America: Persistent inflation and the US debt ceiling debate dampened results, and Canadian P&C net income was affected by fire losses.
• Asia-Pacific: Regional insurers experienced headwinds due to broader market conditions, despite strong revenue growth.

Total return by market capitalization

• Large: Global specialty P&C and reinsurers led the way with the highest returns, as four out of five large insurers reported positive year-over-year growth.
• Medium: Strong earnings growth drove double-digit returns for more than two-thirds of mid-cap insurers.
• Small: Returns for small-cap insurers show a wide range, from -44% to +169%, with four Middle East carriers reporting returns above 100%.

Read next: ACORD examines insurance professionals on the future of the industry

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

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