By Carlos Pallordet

June 2 - (The Insurer) - Insurance shares benefited from a strong upswing in European and U.S. markets in May, driven by easing trade worries and improving growth prospects.

European and U.S. equity markets had recorded notable falls in the preceding two months amid trade policy uncertainty.

The S&P 500 index plummeted in early April following the U.S. government's announcement of extensive tariffs.

Since then, delays in implementing these import taxes, along with encouraging progress in trade negotiations, have helped alleviate market tensions.

In mid-May, the U.S. and China agreed a 90-day trade deal, which sparked investor optimism about a potential rolling back of major tariffs the countries imposed on each other’s goods.

Investors also responded positively to better-than-expected corporate earnings reports and signs of moderating inflation pressures, easing concerns about monetary tightening in the U.S.

The Stoxx Europe 600 index recorded its best May since 2005, ending the month 4.0% higher following losses of 1.2% in April and 4.2% in March.

Among regional markets, the French CAC 40 rose by 2.1% while the UK’s FTSE 100 advanced 3.3%, both benefiting from stronger economic indicators at home.

Meanwhile, Germany’s DAX index continued to outperform its European peers, adding 6.7% in May and accumulating a 20.5% year-to-date gain, with the surge driven by a combination of fiscal stimulus, expectations of monetary easing by the European Central Bank and strong domestic demand.

Shares of Europe-listed P&C (re)insurers benefited from this trend, although the sector-specific Stoxx 600 Insurance index – which also includes life insurance – underperformed the broader index with a rise of just 0.5% in May.

Of the 22 listed European (re)insurers tracked by The Insurer, 15 ended the month in positive territory, with 12 recording share price increases of 5% or more.

Hiscox led the gains among Europe-listed (re)insurers with a 14.7% increase in May.

The London-listed insurer’s share price was boosted by the announcement of new targets at its capital markets day on May 23, including plans to achieve double-digit retail premium growth by 2028.

The new guidance also pointed towards a 20% step-up in Hiscox’s final dividend per share for 2025, which follows a 15% increase in 2024.

Talanx was also a standout performer in May, with its shares rising by 13.3%.

The German holding company delivered an earnings beat for the first quarter, whilst reaffirming its profit target for 2025.

Talanx shares are now up 39.1% over the year to date, trailing only Protector Forsikring, which is trading 41.9% higher following a 10.7% rise in the last month.

Meanwhile, shares in London-listed Aviva increased by 9.0%.

Conduit Holdings also rose by 9.0% as the parent of London-Bermuda carrier Conduit Re reported Q1 top-line growth that exceeded analysts’ expectations and confirmed the appointment of founder Neil Eckert as CEO. However, it still lags the rest of the European cohort, with a fall of 19.9% for the year to date.

Shares in London-listed peers Lancashire and Beazley rose by 7.5% and 6.7%, respectively.

Scor added 5.0% in May but its big four peers underperformed with shares in Hannover Re and Swiss Re sliding by 1.4% and 1.7%, respectively, and Munich Re falling 5.0%.

Allianz was also among the notable fallers last month, with shares in the German carrier dropping 4.2%.

THE PICTURE IN THE US

U.S. equity markets experienced a significant rally in May, with the S&P 500 benchmark surging by 6.2% – its strongest May since 1990 and the highest monthly gain since November 2023.

The sector-specific S&P 500 Insurance index increased by 3.4%, partially recovering from a 5.3% loss in April.

Of the 41 carriers tracked by The Insurer, 32 advanced in May, with 20 of them rising by more than 5% during the month.

Heritage recorded the most significant increase, with its share price soaring by 29.5% in May.

The Florida-based carrier, which reported a 9.5 percentage point improvement in its combined ratio to 84.5% for the first quarter, is trading 102.2% higher year to date.

James River, Skyward Specialty and Palomar were also among the top performers, climbing 22.3%, 19.3% and 18.2%, respectively.

Hamilton Insurance Group, SiriusPoint, Mercury General and HCI Group also achieved significant gains in May, all rising by more than 15%.

Among large-cap U.S. carriers, Cincinnati Financial rose by 8.3% while Axis and Markel added 7.8% and 6.8%, respectively.

The Hanover, The Hartford and Allstate were also up by more than 5%.

At the other end of the spectrum, Root recorded the largest fall in the cohort, shedding 6.2% in May. However, the insurtech – which reported a combined ratio improvement of 6.5 points to 95.6% in Q1 – remains the second most significant riser in the year to date, with a gain of 80.5%.

In contrast, American Coastal lost 5.5% in May and remains the largest faller in the cohort for the year to date, with shares down 19.8%.

Other significant fallers in May were Berkshire Hathaway, down 5.4%, and Everest Group, down 3.2%.

BROKERS RECOVER

May brought a turnaround in fortunes for U.S. intermediaries, which had seen significant declines in shares April.

Ryan Specialty – which slumped 11.3% in April – rose by 9.3% in May.

Meanwhile, Arthur J Gallagher climbed 8.3% after losing 7.1% in April, remaining the best performer on a year-to-date basis with a 22.4% rise.

Among the largest brokers, Aon rose 4.9% in May while Marsh McLennan and WTW added 3.6% and 2.8%, respectively.

The Baldwin Group was the only intermediary in the cohort to experience a fall in May, with shares down 7.4% for the month and down 0.6% on a year-to-date basis.

The broker reported organic revenue growth of 10% for the first quarter and an 80 basis points expansion in its adjusted EBITDA margin to 27.5%.