A.M. Best Special Report: U.S. P/C Insurers’ Stock Prices Essentially Remain Flat Despite Persisting Market Turbulence

OLDWICK, N.J.--()--The first quarter of 2016 was one of the wildest ones in recent memory for equity investors given its initial steep plunge followed by a vigorous recovery; however, by the end of the quarter the damage had been erased, and the average return of U.S. property/casualty insurers was a slight quarter-over-quarter increase of 0.7% .

According to the Best Special Report, titled, “U.S. Property/Casualty Insurers’ Stock Prices Essentially Remain Flat Despite Persisting Market Turbulence,” of the 42 property/casualty stocks covered, 28 had a positive return for the quarter. Returns for small-cap stocks, which averaged a 2.3% decline in share price for the quarter, exhibited the largest degree of volatility. Large-cap, and mid-cap, stocks fared much better than their smaller brethren during the quarter, generating average returns of 2.0% and 5.1%, respectively. Mid-cap stocks showed slightly more volatility, which in part helped generate the higher average increase in share price for the quarter as four mid-cap stocks increased by double-digit percentages.

Overall, the commercial lines segment performed demonstrably better than personal lines, with an average return of 2.6% in first-quarter 2016, compared with an average loss of 2.2%, as 73% (19 of 26) of commercial lines companies posted share price increases during the quarter compared with 56% (9 of 16) for the personal lines segment. Still, all five of the either large or mid-cap personal lines companies generated positive returns.

The group produced net earnings of $12.7 million during first-quarter 2016, compared with a substantial $35.1 million net loss in the prior-year quarter, while its gross premiums written volume of $196.0 million remained on par with the $194.7 million reported in 2015. The average first-quarter 2016 combined ratio for the companies followed in this report was 94.5%.

Throughout the remainder of 2016, companies will continue to be pressured to generate higher investment yields in the persisting low interest rate environment. It currently remains a daunting challenge to invest new money at higher rates without taking on unwanted levels of increased risk, especially for those companies that have not consistently demonstrated the ability to generate underwriting gains.

To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=250181.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
David Blades, CPCU, +1 908 439 2200, ext. 5422
Senior Industry Research Analyst
Credit Rating Criteria –
Research and Analysis
david.blades@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
David Blades, CPCU, +1 908 439 2200, ext. 5422
Senior Industry Research Analyst
Credit Rating Criteria –
Research and Analysis
david.blades@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com