By Carlos Pallordet

May 13 - (The Insurer) - The North American insurance composite compiled by Stonybrook Capital and Weild & Co underperformed all broader market indexes last week, despite a run of relatively positive earnings announcements.

The S&P 500 declined 0.5% for the week while the Nasdaq-100 and the Dow Jones Industrial Average both slid by 0.2%.

In contrast, the small-cap Russell 2000 index nudged 0.1% higher.

Stonybrook-Weild noted that markets sagged heading into the weekend despite positive trade sentiment spurred by a new U.S.-UK deal and the start of negotiations with China.

“Meanwhile, the Federal Open Market Committee $(FOMC)$ maintained its target range for the federal funds rate at 4.25%-4.5% on Wednesday. This was the third consecutive meeting where the Fed left interest rates untouched, based in part on the potential inflationary impact of tariffs,” the investment banks said.

The banks also noted that the FOMC said the potential for higher unemployment and higher inflation had risen – the key ingredients of “stagflation”.

“Note that with the Fed funds rate at 4.33% and the personal consumption expenditure index (the Fed’s preferred measure of inflation) at 2.3%, monetary policy is restrictive,” they added.

In the North American insurance composite, advancers led decliners by 65 to 43, with eight of the 12 industry groups advancing in the week.

The two best-performing groups were coastal insurers, up 11.6%, and insurance service providers, up 3.8%.

Among the former, Heritage Insurance led the gains, advancing 33.6% for the week after reporting a 9.5 percentage point improvement in its combined ratio to 84.5% in the first quarter.

HCI Group experienced the second-highest rise, with its shares up 13.2% over the week. The Florida insurer reported an 11 point improvement in its combined ratio to 56% in the first quarter, with the carrier’s CEO also revealing that its Exzeo technology platform is ready to be spun off into its own public company.

Shares in Universal Insurance were up 3.1% in the week.

In contrast, American Coastal was the only constituent in the peer group to lose ground last week, with its shares down 4.5% after the insurer reported an 11.8 point deterioration in its quarterly combined ratio to 65.0% because of higher policy acquisition costs.

The group of reinsurers also had a relatively good week, rising 2.3% on average.

Shares in Reinsurance Group of America and RenaissanceRe, the second- and third-largest companies in the cohort by market capitalisation, both advanced by 3.6%.

SiriusPoint experienced the largest rise in the cohort, ending the week up 7.4%, adding to gains of 8.5% in the previous week.

In contrast, market leader Everest Group remained in negative territory with a 0.1% loss, after falling 1.3% in the previous week.

The two worst-performing groups in the composite were title insurers, down 8.5%, and global P&C, down 4.0%.

Among the latter, Berkshire Hathaway's 4.7% decline had a significant impact, pulling down both the industry group and the overall composite index due to its substantial market capitalisation.

The share price fall followed the announcement on May 3 that Warren Buffett will step down as CEO of Berkshire Hathaway at the end of the year, with vice chairman Greg Abel set to take over.

Meanwhile, AIG shares also ended in negative territory, losing 1.5% in the week.

The group of specialty commercial insurers also closed in the red last week, shedding 0.4%.

Shares in Intact Financial, the largest company in the group by market capitalisation, were down 3.4%.

Meanwhile, shares in IGI fell by 9.9% in the week after the carrier reported a 20.3 point deterioration in its combined ratio to 94.4%.

American Financial Group was also among the most significant fallers in the cohort, with the company’s specialty P&C insurance combined ratio deteriorating by 3.9 points to 94% in Q1.

In contrast, shares in Arch Capital, the second-largest company in the cohort by market capitalisation, rose 2.2%.

Hamilton Insurance Group led the gains across the cohort with a rise of 9.5%, following an earnings beat for the first quarter, despite reporting a wildfire-driven 20.1 point deterioration in its combined ratio.

The Stonybrook-Weild North American Insurance composite is up 8.4% on a year-to-date basis.