By Carlos Pallordet
Feb 3 - The North American insurance composite, compiled by investment banks Stonybrook Capital and Weild & Co rose 1.1 percent in the week to Friday, with eight of the 12 industry groups advancing in the week.
The S&P 500 benchmark finished the week down 1.0 percent while the tech-heavy Nasdaq-100 shed 1.4 percent as markets were impacted by a sell-off in technology stocks triggered by Chinese AI start-up DeepSeek, which has recently unveiled a groundbreaking, cost-efficient model that calls UA AI dominance into question.
The announcement by the White House on Friday afternoon of a 25 percent tariff on goods from Canada and Mexico, plus a 10 percent tariff on goods from China and plans for more on the EU, also rattled markets.
“This was a very dynamic week. Monday saw the largest one-day loss on any one stock ever, as Nvidia lost $600bn in market cap when Chinese AI startup DeepSeek introduced a service that used less expensive chips,” Stonybrook-Weild explained.
“It consumes less power to achieve comparable results, although perhaps aided by some plagiarism. The implication is that there are ways to design far cheaper AI, reducing the potential size of that vital growth market,“ they added.
The week also saw the release of the core personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred inflation gauge – which remained at 2.8 percent for December.
“On Wednesday, the Fed announced that rates were unchanged at 4.25-4.50 percent as had been generally expected, although bond yields rose modestly on the news. Inflation progress has stalled over the last few months as the labour market has remained strong,” the investment banks said.
“As a result, the market expects that rate decreases must wait for signs of a slowing economy, slowing job market, slowing inflation, or all three,” they concluded.
Stonybrook-Weild highlighted that while the small-cap Russell 2000 does not include Nvidia, it was down 0.9 percent for the week “likely due to the realisation that interest rates will remain higher [for] longer.”
In the North American insurance composite, advancers led decliners by 73 to 36.
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The two best-performing groups were personal lines insurers, up 3.4 percent, and insurance service providers, up 2.8 percent.
Among the first group, insurtech Root led the gains with a 17.0 percent surge, followed by Kingstone Companies, which jumped 11.6 percent.
The two companies were the outstanding performers of 2024, rising 592.7 percent and 613.1 percent respectively in the year.
Meanwhile, shares in Progressive and Allstate, the two largest companies in the cohort by market capitalization, rose 3.4 percent.
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Unlike personal lines insurers, the group of standard commercial insurers remained flat, edging up just 0.2 percent.
Shares in Selective Insurance Group, which fell 9.8 percent, dragged down the group’s average.
The fall came after the carrier missed Q4 2024 earnings consensus, with the insurer reporting a 4.8 combined ratio deterioration to 98.5 percent for the fourth quarter. The results were hit by $100mn of reserve strengthening in general liability and excess and surplus lines.
United Fire Group and Hanover Insurance Group were also among the fallers in the cohort, with shares down 1.8 percent and 0.4 percent respectively for the week.
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Meanwhile, the group of reinsurers, was the worst performing cohort in the composite, with shares down 3.4 percent on average.
In particular, RenaissanceRe lost 9.2 percent in the week to Friday, despite reporting a Q4 earnings beat as its combined ratio deteriorated 15.7 points and analysts highlighted lower-than-expected top-line growth.
Similarly, shares in Everest Group traded down 4.8 percent for the week, as investors reacted to news of a record $1.7bn US casualty reserve charge.
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The group of global brokers had a relatively good performance, rising 1.1 percent on average.
AJ Gallagher led the gains with a 4.3 percent rise followed by WTW which was up 2.2 percent.
Meanwhile, Marsh McLennan finished in negative territory, losing 0.9 percent in the week to Friday.
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The Stonybrook-Weild North American Insurance composite is up 2.4 percent on a year-to-date basis, leading the Nasdaq-100 but trailing all other major indices.
In this article, we have included a selection of industry comp tables published in full by Stonybrook and Weild & Co in their weekly update.
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