By Carlos Pallordet

March 3 - (The Insurer) - Strong fourth-quarter earnings propelled P&C stocks across both sides of the Atlantic in February despite a rocky month for Wall Street.

• European Stoxx 600 Insurance index surged 5.0% in February

• Hiscox and Zurich topped gains, rising 8.5% and 7.2%, respectively

• UK insurers Admiral and Aviva also among most significant February advancers

• Conduit fell 13.0% on higher-than-expected LA wildfire loss estimate

• U.S. P&C stocks also outperformed, with S&P 500 Insurance jumping 7.1%

• Over half of U.S. panel climbed more than 5%, having been weighed down by the LA wildfires in January

• Shares in Root surged 38.6% followed by Palomar Holdings with a 19.3% rise

• Skyward Specialty advanced 17.5%, recovering from a 12.4% loss in January

• Brokers also posted strong gains with Brown & Brown, Gallagher and Aon each adding more than 10%

European P&C stocks maintained their strong performance in February, driven by renewed investor confidence in European equities despite ongoing political and trade uncertainties and sluggish regional growth.

Buoyed by financial-sector shares, the Stoxx Europe 600 index reached an all-time high last week, ending the month with a 3.3% gain. This marked its strongest February performance since 2019.

Among national benchmarks, the German DAX climbed 3.8% while France’s CAC 40 rose 2.0%.

In the UK, the FTSE 100 index advanced 1.6%, adding to a gain of 6.1% in January.

Conversely, in the U.S., the S&P 500 benchmark fell 1.4% for the month, while the Dow Jones Industrial Average dropped 1.6%.

The implementation of tariffs by the Trump administration has created economic uncertainty in the U.S., with analysts warning that escalating tariffs will likely result in higher prices, slower economic growth and retaliatory measures from trade partners.

Meanwhile, the core personal consumption expenditures price index, the Federal Reserve’s preferred gauge of inflation, rose 2.6% in January, in line with expectations but indicating persistent inflation.

These challenges have led investors to shift investments from high-valued U.S. stocks to European defensive and growth stocks.

Shares in Europe-listed P&C (re)insurers continued to benefit from this trend, with the sector-specific Stoxx 600 Insurance index rising 5.0% in February.

Only five out of 22 listed European (re)insurers tracked by The Insurer ended the month in negative territory while eight of the carriers in the group recorded gains of 5% or more.

Hiscox led the gains among Europe-listed (re)insurers in February with an 8.5% increase, after the London-listed (re)insurer posted record annual profits and announced a new wave of capital returns to investors. Management also offered bullish commentary on growth prospects for 2025.

The carrier was among the laggards in the European cohort last year, advancing only 2.8%.

Zurich and Talanx ranked second and third in the European cohort with monthly share price increases of 7.2% and 6.8%, respectively.

UK insurers Admiral and Aviva were also among the most significant advancers in February with increase of 6.4% and 5.9%, respectively.

Among the big four reinsurers, Scor rose 5.4%, while Munich Re and Swiss Re were up 4.6% and 3.5%, respectively. Hannover Re lagged its peers but remained in positive territory with a gain of 0.8%.

Despite losses from the Los Angeles wildfires in January, continental reinsurers are ramping up capital distributions as they prepare a softening market over the next two years.

Munich Re announced a 2.0 billion euro ($2.1 billion) share buyback programme to be completed by the time of its 2026 annual general meeting and increased its dividend for its 2024 financial year to 20 euros per share. Swiss Re raised its dividend to $7.35 a share, up 8% from the previous year.

Conduit Holdings suffered the most significant monthly loss among the European cohort with its shares tumbling 13.0% after the pure-play reinsurer disclosed a higher-than-expected net loss estimate for the California wildfires.

Nordic carriers were also in negative territory last month, with shares in Storebrand slumping by 8.2% and Norwegian peers Protector Forsikring and Gjensidige losing 4.1% and 0.6%, respectively.

London-listed Lancashire also ended the month in negative territory with a fall of 4.8%.

The carrier revealed in February that it expects aggregate net ultimate losses of between $145 million and $165 million in relation to the recent Southern California wildfires.

THE PICTURE IN THE US

Across the Atlantic, U.S. P&C insurance stocks delivered significant gains in February, narrowing the year-to-date performance gap with their European counterparts.

The sector-specific S&P 500 Insurance benchmark rose by 7.1%, following an increase of 2.1% in January.

Out of 41 carriers in the cohort, 34 recorded gains in February, with 22 of them rising by 5% or more.

Root was the top performer for the second month running. The auto insurtech's shares shot up last Thursday to close February 38.6% higher after reporting a second consecutive quarter of net profitability and outperforming expectations across a number of key metrics.

In January, shares in the carrier had gained 34.3%.

Palomar Holdings was the second most significant riser in the U.S. cohort, advancing 19.3%.

The California-based company reported an earnings beat for the fourth quarter, in results that included a 1.7 percentage point deterioration in the combined ratio to 75.9% and a 23.3% increase in gross written premiums.

Meanwhile, Skyward Specialty rose 17.5%, having fallen 12.4% in January.

Shares in the company had plummeted in the immediate aftermath of the LA wildfires, but a report from JMP analysts Matthew Carletti and Karol Chmiel at the time suggested that the stock's reaction was “overdone” given Skyward's limited exposure to the disaster and low reinsurance retention.

Universal Insurance Holdings also recovered ground in February with a 14.7% rise, bringing its share price back to early December levels.

Among the large-cap constituents in the cohort, Progressive rose 14.4% while AIG gained 12.6%. Berkshire Hathaway climbed 10.3%.

At the other end of the spectrum, Fidelis Insurance Holdings lost 10.8% in February. Shares in the Bermudian traded down after it announced a $287.2 million reserve charge related to Russia-Ukraine aviation exposures and up to $190 million in California wildfire losses.

Meanwhile American Financial Group and Kingstone Companies were down 7.5% and 5.5%, respectively.

Among brokers, price momentum picked up speed in February following January's positive performance.

Brown & Brown led the gains with a 13.3% rise, followed by Arthur J Gallagher with an 11.9% monthly gain.

Aon shares climbed 10.3% in February, while Marsh McLennan and Ryan Specialty climbed 9.7% and 5.1%, respectively.