Where the Puck is Going in P&C Insurance into 2H26

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Where the Puck is Going in P&C Insurance into 2H26

s and improving bundling momentum in 2H26 & ’27

driving an incremental 1-2pts of NPW growth. PGR trades at 14x normalized earnings

vs the 16x LT average as AV and ADAS weigh. We still see AV as outside of a reasonable

investment horizon and lower industry Premium growth from ADAS penetration being offset

by increased share gains at PGR. These share gains are driven by an ad spend advantage

(~$6b and growing vs $3b potential at GEICO) and further leveraging scaled data to

enhance pricing sophistication on targeted customers. We prefer PGR but see ALL buying

back more stock if it is a light natcat year and having better favorable PYD (on AY25

specifically) as potential offsets to faster AY margin normalization and weaker alternative

inv returns.

◼ Auto Competition will continue to intensify as is reflected in the stocks (although we have

been surprised that renewal pricing changes have been modestly negative to date Fig18)

with recent State Farm commission cuts likely to result in more auto price decreases. We

have been worried that peers who are unable to price as granularly as PGR will instead

apply broader price decreases across their entire books that drives a softer market, but we

haven’t seen that to date on renewal business. Elevated loss cost up 4-5% vs pricing -1-3%

also creates a dynamic where margins could revert to normal sooner than expected,

especially if first party frequency rebounds (our base case and why we are -5-6% below

consensus for PGR & ALL)

◼ Property cat Reinsurance rates were down 15-25% at 6/1, roughly in line with our

expectations. A predicted light SE wind season could mean outsized ROEs and BVPS

growth (turbocharged by buybacks-Fig2), but also continued softness at 1/1/27 renewals.