EPS Beat on Underwriting, Cats, PYD, but Pricing 'Overly Soft' and Spreading

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EPS Beat on Underwriting, Cats, PYD, but Pricing 'Overly Soft' and Spreading

TD Cowen Chubb Limited

Global Research July 21, 2026

VALUATION METHODOLOGY AND RISKS

Valuation Methodology

P&C Insurance:

The primary methodology we use to value the P&C insurance sector is forward price / earnings

multiples. We typically take a sum-of-the-parts approach, applying different target multiples

to earnings from traditional commercial insurance, specialty insurance, personal lines and

reinsurance, largely based on peer valuations, but also informed by company-specific factors

(e.g., growth outlook, track record, earnings quality, etc). In general, companies with higher

earnings contributions from specialty and personal lines insurance tend to trade at higher

multiples, all else equal.

We make investment recommendations on certain early stage, pre-revenue companies based

upon an assessment of their business model, technology, probability of market success,

and the potential market opportunity, balanced by an assessment of applicable risks. Such

companies may not be assigned a price target.

Investment Risks

Key risks for the P&C insurance sector include: Elevated economic / social inflation (which

could drive adverse reserve development, as well as pressure current accident year margins);

rising catastrophe losses (exacerbated by climate change); increased supply of industry

capital (driving pressure on pricing); lower interest rates (which would pressure net investment

income); and rising credit concerns (which could drive investment portfolio losses). While a

slowdown in economic growth could likely pressure the sector’s top-line growth outlook, P&C

insurance is typically viewed as defensive by investors, meaning a more favorable macro /