U.S. Insurance: Momentum shift or fundamental change: positioning insurance stocks post-bottom?

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U.S. Insurance: Momentum shift or fundamental change: positioning insurance stocks post-bottom?

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U.S. Insurance

Momentum shift or fundamental change:

positioning insurance stocks post-bottom?

Industry Overview

Insurance underperformance appears to be reversing 30 June 2026

Since the April 2025 “Liberation Day” tariff announcements, insurance stocks have Equity

meaningfully underperformed the broader market despite generally healthy operating United States

results. The sector has been caught between two competing narratives: peak Insurance

underwriting margins on one hand and a market increasingly rewarding secular growth Joshua Shanker

on the other. Investors have largely looked through strong earnings and instead focused Research Analyst

on concerns of future margin normalization, causing many insurance stocks to trade BofAS+1 347 821 9017

materially below historical relative valuation ranges. Whether justified or not, the result joshua.shanker@bofa.com

has been a broad de-rating of the sector that appears more severe than the underlying Cyril Onyango

Research Analyst

deterioration in fundamentals. BofAS

cyril.onyango@bofa.com

Low beta, low short interest tends not to drive momentum Fatima Keita

Insurance stocks generally possess many of the qualities that active managers currently BofAS

seem reluctant to pay for: low beta, modest trading velocity, limited short interest and fatima.keita@bofa.com

relatively predictable business models. Unlike more cyclical or highly levered sectors,

there has been little opportunity for significant estimate revisions or short squeezes to

drive excess returns. While these characteristics often support downside protection

during periods of market stress, they can become headwinds in momentum-driven