2Q26 P&C Insurance Preview: Something's Got to Give

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2Q26 P&C Insurance Preview: Something's Got to Give

Summary

The entire P&C insurance space has outperformed recently despite consistent to slightly

deteriorating fundamentals. We see this as driven largely by flows and we are becoming

increasingly cautious as we see negative estimate revisions at most carriers. While the personal

lines are trading at discounted P/E multiples and reinsurers at discounted P/BVs as they are

over-earning, commercial lines are trading above prior soft market levels, which makes us feel

worse about the group headed into 2H.

Key themes in 2Q26 results incl:

◼ Commercial P&C pricing pressure to continue in property-heavy 2Q renewal. A

heavier mix of property renewals will weigh on disclosed pricing and we see continued

pressure despite lapping 2Q25 (when property pricing took its first drastic move lower). We

see the TRV BI RRC coming in at 2% and RPC at 4.5% while CB NA Cml pricing should be

+2% (incl 0% rate), flat pricing at AIG in NA Cml, and +3.3% price at HIG. Rate disclosures

could be supported by insurers walking away from business (CB did this in 1Q26 but TRV

and AIG also mentioned pulling back in large acct), but efforts to retain business could

overwhelm this discipline. While CB and AIG have had pricing below loss trend in NA Cml

for over a year, the property pressure will likely trickle into middle and small commercial,

putting more pressure on TRV and HIG pricing (although we believe pricing won’t get as

competitive in the SMID market). Despite concern over casualty pricing, we see continued

MSD-HSD% rate increases and potential for stabilization in D&O

◼ Personal auto margins to deteriorate despite solid results at PGR in 2Q to date; chip

cost increase pressures on severity in focus: we est PGR’s AYLR ex cat in auto