North America Insurance - Property & Casualty: Buybacks Appear Critical to Soft-Market Stock Success

Research evidence excerpt

North America Insurance - Property & Casualty: Buybacks Appear Critical to Soft-Market Stock Success

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20 Jul 2026 05:00:00 ET │ 17 pages

North America Insurance - Property &

Casualty

Buybacks Appear Critical to Soft-Market Stock Success

Insurance

CITI'S TAKE North America

ACBuybacks are an important capital allocation tool that correlates with total Matthew Heimermann

returns when the industry lacks pricing power. Based on our analysis of +1-404-443-4732

these periods (see Figure 1), total returns in the quarter following significant matthew.heimermann@citi.combuyback activity (>2.5% of volume) tend to result in higher total returns than

when buybacks are lower (3.9% vs. 3.1%). Buyback activity tends to increase Patrick Marshall

when growth prospects for the industry slow. However, higher operating +1-212-816-2651

returns (~300 bps higher than when pricing power is positive) tend to patrick.c.marshall@citi.com

compensate for slower growth (see Figure 3 and Figure 4). Buyback activity

in these significant periods tends to support PE valuations (~12.3X vs. 12.4X

since 2000). With growth prospects below 5%, repurchase activity for the

industry should exceed 2% (based on consensus forecast). In our coverage

group, we believe RenaissanceRe (Buy-rated) is a significant beneficiary.

See Figure 13 for other stocks that could be positively exposed.

Lower industry organic growth increases the importance of capital allocation —

Companies can only do four things with their capital—reinvest in organic

opportunities, inorganic opportunities, invest in operations and technology, or

return it to shareholders. While inorganic growth may become a higher priority (see

related publications later in the report), the importance of returning capital to