4 Top Insurance Stocks That Outperformed S&P 500 In 2019

The year 2019 is nearing an end and the Zacks S&P 500 composite has performed quite favorably after a disappointing 2018. The benchmark index has gained 26.1% year to date after losing 5.9% in 2018. Optimism over trade talks between the United States and China, Fed’s bullish outlook on U.S. GDP, a strong labor market, solid manufacturing data, and a stable housing market have contributed to the index’s upside.

Factors That Worked in Favor of the Insurance Space

The insurance industry seems to have benefited from a not-so-active catastrophe environment. During the first half of 2019, preliminary economic loss totaled $73 billion while the preliminary insured loss was $20 billion, stemming from 163 catastrophe events across the globe, per reports from Aon. However, the economic loss and preliminary insured loss were respectively 40% and 45% lower than the 10-year average, the report stated.

The third quarter saw Hurricane Dorian making landfall in the Bahamas. Risk modeling and analytics firm RMS expects insured losses to range between $3.5 billion and $6.5 billion from Hurricane Dorian while catastrophe modeler Karen Clark & Co. estimates insured losses in the United States and Caribbean to be around $5 billion, per media release.

Insurers gained from pricing that firmed up in 2019. According to the Commercial Lines Pricing Survey issued by Willis Towers Watson PLC on Monday, U.S. commercial pricing continued to accelerate during the third quarter, increasing by more than 4% compared with the same period a year ago.

According to MarketScout’s composite rate for personal lines continued to rise, with rates increasing from 3.5% plus in the second quarter 2019 to 4.5% plus in the third quarter of 2019, as rate rises seemed to accelerate, in areas that suffered from catastrophe losses.

However, the Federal Reserve lowered rate by 25 basis points each twice in the first nine months of 2019, citing muted inflation pressure and geopolitical tension. A higher invested asset base somewhat offset the impact of low rates for insurers. Rate cut in the near term horizon is unlikely and that should make insurers better off.

1 2 3
View single page >> |

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.