Artisan Small Cap Fund Q2 2025 Highlights Guidewire Software and AI Trends in Insurance

Artisan Partners released its second-quarter 2025 investor letter for the Artisan Small Cap Fund, detailing market performance and key holdings relevant to the insurance sector. The fund posted returns of approximately 7.3% across its classes, lagging behind the Russell 2000 Growth Index's 11.97% for the quarter. One highlighted holding is Guidewire Software, Inc., a leader in property and casualty (P&C) insurance software that transitioned from licensed software to a cloud subscription model. Guidewire's 52-week stock gain reached over 45%, though it declined slightly in the recent month. Artisan Partners has been trimming its position in Guidewire due to its increased market capitalization nearing the fund's small-cap limits, despite ongoing profit growth and optimism about the company's prospects. Guidewire is notable for its AI-driven software solutions that support P&C insurers in enhancing efficiency and claims processing capabilities. Hedge fund interest in Guidewire grew from 55 to 67 portfolios in the latest quarter. The letter implies that emerging AI-related stocks within insurance technology may offer higher growth potential. Separately, the discussion around artificial intelligence (AI) highlights its escalating energy demands, stressing energy infrastructure's critical role in supporting AI's expansion. The insurance market faces evolving challenges with increasing adoption of AI-driven technologies, influencing underwriting, claims, and risk assessment. Industry professionals should track developments in AI infrastructure investments alongside shifts in tech providers like Guidewire to navigate regulatory and market changes. Artisan Partners' insights and market data offer valuable indicators for insurance investment strategies amid a transforming technological landscape.