The share prices of 18 US insurtechs that went public in the past ten years rose as a group in 2020. But so far, large non-insurance technology companies and traditional insurance stocks have both outperformed insurtechs in 2021.
Hudson Structured Capital Management reported the relative findings in the week of April 18 when it simultaneously unveiled a new stock index created and managed by HSCM – the HSCM Public Insurtech Index or HPIX – to measure the performance of the insurtech sector in public markets .
"We believe this is the first and only index of its kind available to the public," Adrian Jones, a director of HSCM and a partner in HSCM's Insurtech group, wrote in a LinkedIn post.
According to an announcement published on HSCM's website, the HPIX plans to track the price movements of a portfolio of common stocks listed in the past 10 years by companies in the United States insurance sector that it says & # 39; new differentiated business models & # 39; to have. through technology. "
The business descriptions "were taken at face value in the index construction," HSCM said.
The index is calculated by Solactive AG, an index calculation agent. It is available online, on Bloomberg as ticker HPIX INDEX, and on Reuters Instrument Code .HPIX.
Currently, the index tracks the sock prices of 18 companies, including property / accident carriers Kinsale Capital Group, Lemonade, Metromile, Palomar Holding and Root, distributors including EverQuote and Goosehead Insurance, as well as software vendors Duck Creek and Guidewire.
Companies should not only have new business models that are distinguished by technology meet a number of other criteria. For example, the company must be an operating company, not a Special Purpose Acquisition Company (SPAC), and have a total market capitalization of more than $ 500 million. Companies that are mainly reinsurers are not included in the index.
To be included, a company must derive at least a portion of its annual group sales from insurance activities, including data services, software, computer systems, marketing, lead generation, price comparison, direct or digital distribution, agency management, agent / broker, insurance, insurance company, risk management, claims management, loss prevention and related products or services.
In terms of performance, the HPIX climbed 75 percent in 2020. But after continuing to rise from 175 to 203 on February 12, 2021, the index has since fallen to the range of 150-160 in March and April.
While the HPIX fell about 8 percent year-to-date on April 27, the Solactive United States Technology 100 ("Tech 100"), an index of 100 largest technology companies traded on Nasdaq, rose 9 percent over the same period. However, the announcement notes that stock prices of smaller and younger companies may be more volatile than share prices of larger companies in the same industry.
Also in contrast to this year's HPIX decline, traditional insurance stocks are up this year, HSCM emphasized.
HSCM stressed that the companies in the HPIX "should not be seen as a definitive list, nor an endorsement of companies included", and noted that new companies can be added or removed at the beginning of each quarter.
The HPIX is weighted by total market capitalization, and each company's weight is limited to 15 percent, HSCM said.
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