By Carlos Pallordet

Jan 20 - (The Insurer) - The North American insurance composite, compiled by investment banks Stonybrook Capital and Weild & Co was up 5 percent in the week to Friday, with all twelve industry groups rising.

The Dow Jones industrial average was up 3.7 percent, recovering losses from the previous week.

Meanwhile, the S&P 500 and the tech-heavy Nasdaq-100 were both up 2.9 percent in the week to Friday.

Robust US employment figures and encouraging signs in inflation data were major drivers behind the surge.

“The market heaved a sigh of relief as the Producer Price Index (a preferred gauge of the Fed) posted a 0.2 percent increase in wholesale prices for the month of December. This was half of the 0.4 percent that had been expected,” Stonybrook-Weild explained.

“Meanwhile, the Consumer Price Index, which is more broadly followed by investors and consumers, was also a touch better than expected,” they added.

The small-cap Russell 2000 surged almost 4.0 percent with Stonybrook-Weild noting that small-cap stocks are particularly sensitive to interest rates, as lower inflation often portends a decrease in the cost of borrowing, resulting in higher earnings.

“However, it should be noted that despite the Fed rate cuts in the latter part of 2024, mortgage rates and the 10-year Treasury are still stubbornly high, which denotes a fair bit of skepticism that the Fed will be cutting interest rates anytime soon,” the investment banks argued.

“Finally, we hope that the ceasefire takes hold between Israel and Hamas, that the hostages are finally released, and peace breaks out in the Middle East. There is optimism that with the new administration, the Abraham Accords will be extended to Saudi Arabia which might help stabilise the region,” they added.

In the North American insurance composite, advancers led decliners by 103 to 7 in the week.

The two best performing groups were title insurers, up 7.2 percent, and other brokers and distributors, up 5.9 percent.

Among the latter, the Baldwin Group and Goosehead Insurance were the outstanding performers, with shares up 15.4 percent and 11.9 percent respectively.

Ryan Specialty was also among the major risers, with a surge of 6.6 percent in the week.

Among carriers, the global P&C and coastal insurers industry group saw both a rise of 5.8 percent.

AIG led the gains in the former, with a rise of 6.5 percent followed by Berkshire Hathaway which was up 6.0 percent.

Meanwhile, shares in Chubb – which has exposure to the LA wildfires – rebounded by 4.6 percent in the week after experiencing a 5.2 percent in the previous week.

The group of standard commercial insurers saw a 4.4 percent rise.

Old Republic and CNA financial led the gains with shares up 7.7 percent and 6.5 percent respectively.

Meanwhile, leader Travelers saw its shares recover 3.1 percent after falling 4.1 percent in the previous week.

A report from KBW last week identified Travelers, Allstate and Chubb among the publicly listed carriers most exposed to the losses from the LA wildfires.

Meanwhile, the two worst-performing groups in the composite were micro-cap insurers, up 0.2 percent, and reinsurers, up 2.6 percent, with Stonybrook-Weild noting that “some personal lines and reinsurer issues have been held back by continuing concerns on wildfire losses”.

Conduit Holdings in particular, was one of the few decliners of the week, with shares sliding 0.5 percent after losing 4.9 percent in the previous week.

In contrast SiriusPoint, which had shed 8.2 percent in the previous week, led the gains last week with a 4 percent recovery.

Meanwhile Greenlight Capital was up 3.5 percent while RenaissanceRe and Everest Group added 3.0 percent and 2.4 percent, respectively.

The Stonybrook-Weild North American Insurance composite is up 1.8 percent on a year-to-date basis.

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