Equity markets finished the first half of 2021 at record highs, and insurers across the life and property and casualty space are becoming more excited about their prospects as a number of nations get control of the COVID-19 pandemic and end restrictions.
The S&P 500 gained 1.67% to close the week ending July 2 at a record high 4,352.42, while the SNL U.S. Insurance Index edged up 0.16% to 1,397.42.
CreditSights analysts Josh Esterov and Connor Burnham said insurance companies are starting to see a glimpse of the potential post-pandemic future as sales challenges decrease and the interest rate environment improves.
"We're coming to what appears to be some of the light at the end of the tunnel," the analysts said. "The uptick in employment is favorable for group life insurance accounts [and] it's favorable for certain P&C lines of business in terms of premium development."
They also pointed out that insurers are seeing credit losses in their investment portfolios come in "better than expected," which is another cause for optimism. However, there could also be a period of more "intense competition" on the life insurance side since some insurers may have pent-up sales targets that they want to meet, the analysts said. On the P&C side, companies may be looking at how they can best expand their core capabilities into other segments.
Insurance stocks were mixed across multiple sectors for the week, which was fairly quiet with the exception of a few insurers that released updates related to various transactions.
Principal Financial Group Inc. earlier this week announced it is exiting the U.S. retail fixed annuities market by discontinuing new sales of its deferred, payout and indexed annuities after it completed a strategic review of the company. The insurer has also said it instead plans to pursue strategic alternatives, including divestiture of the related in-force blocks, which have policy reserves of about $18 billion. Principal will continue to sell its variable annuity offering. The company's shares declined 1.69%.
Meanwhile, MetLife Inc. may be nearing a deal to sell some of its businesses in Europe. NN Group NV confirmed earlier this week that it has made an offer to purchase part of those businesses and was understood to be in conversations to acquire MetLife's Greek and Polish units for about $740 million.
MetLife's stock closed the week down 0.98%.
Voya Financial Inc. shares went up in the same week that it completed its acquisition of Benefit Strategies LLC, a third-party administrator of health savings and spending accounts. Voya's shares picked up 1.22%.
In Florida, search and rescue operations continue at the site of the partial collapse of the Champlain Towers South condominium as questions loom over which parties may ultimately be financially responsible for the building's fall and the deaths of many of its residents.
According to The Insurer, Great American Insurance Co. is believed to be the lead carrier for Champlain Towers' all other perils property coverage of the building.
James River Group Holdings Ltd. has also agreed to commit the entirety of its $5 million general liability coverage limit to resolve claims from lawsuits, several of which have already been filed. Its shares were essentially flat on the week.
