A strong week for managed care stocks helped the insurance market fare slightly better than the S&P 500.
The S&P 500 fell 0.11% to 2,640.87 over the five-day trading period ended March 29, while the SNL Insurance Index rose 0.24% to 990.36.
After a pullback in managed care stocks, which came amid a wider market downturn and a large mutual fund's decision to withdraw its holdings in UnitedHealth Group Inc., investors may have moved back to the sector because it is less affected by broader economic concerns, RBC Capital Markets analyst Frank Morgan said.
"When you're worried about the effect of a trade war, [managed care is] just not an area that's going to be affected," he said in an interview. Stocks that are more sensitive to exports will likely be more volatile, he added.
The Federal Reserve recently raised its benchmark interest rate again, which Morgan noted could increase worries of inflation. The federal funds rate is now at a target range of 1.50% to 1.75%, and the Fed has indicated the possibility of two more rate hikes this year.
UnitedHealth, the largest health insurer in the U.S., saw its shares rise 2.14% to $219.82 during the period.
Morgan said that although companies have generally been quiet heading into the Easter holiday weekend, Cigna Corp. spent the week meeting with buy-side and sell-side analysts to talk about its proposed deal to buy Express Scripts Holding Co. for $67 billion.
After attending one of those meetings, Morgan said attendees generally believe Cigna has been prudent with the deal. The chemistry between the two management teams should be a "very good" cultural fit, he added.
The company closed the five-day trading period up 1.45% to $167.74.
Aetna Inc., which recently announced its own blockbuster deal, saw its stock fall 0.45% to $168.69 during the period. CVS Health Corp.'s $69.51 billion bid to acquire Aetna would create a one-stop shop where consumers could receive common medical treatments, fill prescriptions and manage their health insurance plans.
Several managed care stocks' gains helped nudge the sector toward outperforming the wider market. Molina Healthcare Inc. was one of the biggest movers in the space during the period, closing up 5.36% to $81.13.
Other managed care stocks that rose during the period were Centene Corp. and Humana Inc., which posted gains of 2.88% and 1.15%, respectively.
The possibility of a sale in the property and casualty sector surfaced this week, with Hanover Insurance Group Inc. announcing that it is considering the sale of its international specialty insurance business, Chaucer. Hanover's stock was up 1.39% to close the period at $117.89.
Aspen Insurance Holdings Ltd. is reportedly in takeover talks with several parties and is preparing to begin a bid process. According to a report from The Insurance Insider, at least one strategic bidder and two private equity houses have approached the reinsurer at a purchase price in the range of $47.50 to $50 per share.
Analysts have been expecting more consolidation among Bermuda insurers, following two of the largest announced acquisitions of insurers based on the island in recent years.
Aspen saw one of the steepest increases during the period, closing up 3.70% to $44.85.
In the life and health insurance space, Genworth Financial Inc. and China Oceanwide Holdings Group Co. Ltd. again extended their merger agreement's deadline. The agreement, which had a previous deadline of April 1, was extended to July 1 so the companies could allow for additional regulatory reviews of the merger agreement.
Genworth's stock was one of the biggest movers during the period, falling 4.07% to close at $2.83.
Market prices and index values are current as of the time of publication and are subject to change.