SECTOR PERFORMANCE UPDATE
Insurance Stocks Proved Resilient During a Volatile First Quarter 2025
All four segments tracked in Mercer Capital’s market-weighted indices outperformed the broader market in the first quarter of 2025. Brokers led the way (+14.9%), followed by Insurtech (+9.8%), P&C (+9.4%), and L&H (+6.3%). For perspective, the S&P 500 was down 4.6% and the NASDAQ fell 9.7%.
The public insurance broker group exhibited strong and steady growth over the period, as all constituents posted double-digit returns, with the exception of WTW and TWFG. The group median multiple of forward EBITDA stood at 18.6x, as compared to 17.6x at year-end.
Insurtech proved to be the most volatile segment, rising nearly 25% by early February before swinging back to a 9.8% indexed return for the quarter. ROOT continued its impressive streak (+84% in Q1), as EBITDA margin moved from negative to positive for the first time.
The P&C Underwriter Index was generally a safe haven, with the returns on the largest firms (Progressive, Chubb, and Travelers) up 18%, 9%, and 10%, respectively.
The Life & Health index, which includes both traditional life insurers and managed care companies, lagged other sectors in 1Q25, though the largest constituent’s post-quarter struggles (UnitedHealth) are not reflected in these figures.
Notable transactions announced in the first quarter included Allstate’s sale of its group health business to Nationwide for approximately $1.25 billion (~13.5x estimated 2024 earnings) and the $1.3 billion acquisition of medmal liability insurer ProAssurance by The Doctors Company (~1.1x book value).
On the brokerage side, Arthur J. Gallagher & Co. announced its acquisition of San Francisco-based Woodruff Sawyer (the 24th largest independent P&C agency per Insurance Journal) for consideration of $1.2 billion, which reflected a 14.1x multiple of pro forma 2024 EBITDA.