Insurance: What We're Hearing From Insurance Investors (05/22/2026)

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Insurance: What We're Hearing From Insurance Investors (05/22/2026)

UpdateMinvestors see no single major bear thesis in brokers, but rather a "death by a

thousand cuts". AI disintermediation, a soft market, and sector rotation/opportunity

cost make it difficult for investors to get more bullish. Further, organic revenue

should face continued challenges in 2Q as property-CAT reinsurance pricing likely

sees further downward pressure by mid-year renewals. While 2H26 organic revenue

should improve as the focus shifts more toward casualty, the opportunity cost of

holding brokers is not very palatable at the moment given the risks above.

Exhibit 1: Organic Growth by Quarter for Insurance Brokers

20.0%

AON MRSH WTW BRO AJG RYAN

15.0%

10.0% Growth

5.0% Organic

0.0%

(5.0%)

1Q25 2Q25 3Q25 4Q25 1Q26 2Q26E 3Q26E 4Q26E

Source: Visible Alpha, Company data, Morgan Stanley Research

Personal lines: Deteriorating industry trend is buffered by near trough multiples.

In our view, Progressive and Allstate monthly results indicate early combined ratio

deterioration, which should gradually impact growth. Further, we expect downside

to EPS revisions if the trend continues. That said, both stocks have held in better

than we thought. Some investors attribute this partially to the near-trough

valuation multiples both stocks trade at ( Exhibit 2 ). This implies that any additional

pressure should stem from incremental EPS declines, not further multiple

compression. While both still trade above trough-on-trough multiples, additional

downside should be harder from here.

Exhibit 2: PGR and ALL NTM P/E L10Y

PGR-US ALL-US

25.0x

20.0x

15.0x

12.3x

10.0x

8.0x

5.0x

0.0x

May-2016 May-2018 May-2020 May-2022 May-2024 May-2026

Source: FactSet, Morgan Stanley Research