P&C Gut Check: Are We Expensive or Cheap? Not All Valuations Are Created Equal

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P&C Gut Check: Are We Expensive or Cheap? Not All Valuations Are Created Equal

Idea

July 15, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMInsurance - Property & Casualty | North America Bob Jian Huang

Equity Analyst

P&C Gut Check: Are We Bob.Huang@morganstanley.comDaniel Lee, ACAS +1 212 761-6136

Research Associate

Daniel.Lee4@morganstanley.com +1 212 761-0219

Expensive or Cheap? Not All Siddhant Shah

Sid.Shah@morganstanley.com +1 212 761-2603

Valuations Are Created Equal

Insurance - Property & Casualty

North America

What’s Changed Industry View Attractive

The Travelers Companies, Inc. (TRV.N) From To

Rating Equal-weight Underweight

Price Target $333.00 $290.00

P&C valuation has rebounded, making the near-term earnings

setup challenging. That said, when comparing to long-term

historical valuations & prior soft markets, P&C sector valuation

remains attractive. Within our coverage however, we downgrade

Travelers to Underweight based on stretched valuation.

Recent share price move could make 2Q earnings set up challenging…. Over the

past month, P&C insurers rallied, with stocks under our coverage up ~12% on

average ( Exhibit 25 ), lifting forward valuation multiples across the board ( Exhibit

26 ). That said, fundamentals have not changed: pricing is softer, and excessive profit

remains intact. The move begs the question of whether sector valuation outran

fundamentals, and the 2Q26 set up could be challenging.

...But relative to history, it's still cheap. While short-term valuations spiked, over a

longer horizon, current carrier and broker valuations remain attractive vs. history.

The broader sector trades at the lower end of soft-market multiples ( Exhibit 4 ),

likely due to carriers' excessive profit and broker multiple compression on AI fears.