SECTOR PERFORMANCE UPDATE
2024: A great year for Brokers, P&C, and Insurtech; Insurance IPOs win big
Mercer Capital’s 2024 market-weighted indices for Brokers (+22.5%) and P&C (+29.9%) straddled S&P 500’s 23.3% return for the year. Insurtech was the surprise winner with a 51.8% return, led by a 55% return for the largest constituent (GWRE) and a nearly 6x return for ROOT.
The Life & Health index, which includes both traditional life insurers and managed care companies, lagged other sectors with a 15% decline in the fourth quarter and 6.9% decline for the year. After a brief post-election rise, fourth-quarter performance was muted for the other indices as well as the broad market.
As a whole, the Broker index performed in line with the market, though individual standouts included BWIN (+61%) and RYAN (49.1%). Newly public broker Woodlands Financial Group (TWFG) posted an 81% return since its July 2024 IPO.
The largest firms in the P&C Underwriter index (PGR and CB) posted returns of 50% and 22%, respectively, though the top performer for the year was specialty underwriter Palomar (PLMR) with a return of 90%. The other notable IPO in 2024 was Bowhead Specialty (BOW), which finished the year at $35/share, approximately twice its May 2024 offering price.
The composite performance of the Life & Health index masks divergent returns between the lagging managed care stocks (UNH and ELV were down 4% and 22% on the year) and life insurers such as MET (+24%) and PRU (+14%).
Announced transaction value in the brokerage space reached $37.2 billion, almost twice the prior year, led by Gallagher’s $13.5 billion acquisition of AssuredPartners and Marsh’s $7.8 billion deal for McGriff. However, overall broker deal count was flat compared to the prior year.
On the underwriter side, 2024 unfortunately marked the third consecutive year of decline in both transaction dollar volume and deal count.