SECTOR PERFORMANCE UPDATE
Macro Volatility and Valuation Reset Drive Broad Insurance Underperformance in 1Q 2026
All sectors declined in 1Q 2026, underperforming an already negative broader market. Insurtech (-21.7%), Managed Care (-20.2%), and Brokers (-16.3%) led the sell-off, while P&C (Standard) (-6.3%) and Life & Annuities (-5.8%) were relatively more resilient.
Geopolitical tensions in the Middle East and continued volatility in growth sectors like SaaS-businesses contributed to the declines. Among insurance-technology companies, the largest firms in our index (Guidewire & Verisk) fell 27% and 15%, respectively.
For brokers, as hard market tailwinds weaken, forward organic growth guidance has been scaled back, which put further pressure on valuations. The forward multiple of EBITDA declined yet again from 13.9x at year-end to 12.3x at the end of Q1.
Managed care stocks declined sharply in 1Q 2026 due to a combination of unexpected regulatory pressures (proposed lower CMS reimbursements), rising medical cost inflation, and growing political scrutiny.
The most notable M&A transaction of the quarter was likely the sale of PE-backed Relation Insurance to BayPine for approximately $1.7B. The deal concludes an on-again, off-again process for the brokerage platform, and reportedly valued the broker at ~13.5x EBITDA.
On the IPO front, Ethos Technologies (NASDAQ: LIFE), a digital life insurance distributor, went public in late January at $19/share, a level well below prior private market levels. Unfortunately, shares declined ~40% through the end of Q1, reflecting the aforementioned broader weakness in insurtech and growth-oriented equities.