Stocks prices of U.S. property/casualty insurance companies rebounded in fourth-quarter 2015 after a tumultuous third quarter. For 42 U.S. publicly traded P/C stocks analyzed by A.M. Best, the average return for the fourth quarter was 3.9 percent.
According to a Best Special Report, titled, “Insurers’ Stock Prices End 2015 on an Upswing Despite Market Turbulence,” the performance of large P/C stocks came closest to the performance of the broad market indices, with a return of 5.9 percent.
Just one of the nine large-cap stocks followed (with the merged ACE Limited-Chubb Corp. entity now represented solely by Chubb Limited), The Hartford Financial Services Group, Inc. experienced a decrease in its price per common share during the quarter, while three organizations experienced double-digit growth.
A.M. Best said that the continued fluctuations in the equity market during the quarter clearly had decidedly positive and negative effects on companies in all three market segments. Percentage-wise, there were a greater number of small-cap companies (29 percent) and mid-cap companies (33 percent) that experienced share price declines compared with companies in the large-cap segment (11 percent).
Publicly-traded commercial lines companies’ stocks outperformed stocks of personal lines companies for the quarter. Stock prices for commercial lines organizations increased by 5.8 percent on average, while personal lines experienced a modest increase of 0.7 percent.
A.M. Best analysts are cautiously optimistic, but not enthusiastic, about the prospects for P/C stocks in 2016. They remain wary of the potential impact of rising interest rates on insurer balance sheets since approximately 80 percent of the average P/C insurer’s asset portfolio is composed of medium-duration, investment-grade, fixed-income investments.
Source: A.M. Best
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