Q3 earnings preview: Softening pricing for carriers and slowing broker growth in focus for investors

By Michael Loney Oct 14 (The Insurer) — Key themes for US-listed P&C companies’ third-quarter results include the extent to which softening is challenging carriers’ growth, the adequacy of casualty reserves and brokers’ ability to achieve organic growth, according to equity analysts. Q3 earnings for US-listed P&C companies begin on Thursday with Marsh's results, offering an early indication of how brokers fared in the quarter. Next up is Travelers on Friday, WR Berkley and RLI on Monday and Chubb on Tuesday, providing a first view of carrier performance in the quarter. 9% for Citizens’ coverage universe), and possible additions to casualty loss reserves.

Internationally, he expects some more losses from the Iran war, particularly as many losses generated through facilities are reported on a one-quarter lag. ‘healthy’ Underwriting Profitability Despite Softening Equity analysts at BofA Securities led by Joshua Shanker highlighted the quiet hurricane season but said global carriers would still face catastrophe losses from international events, while adverse weather events in the Midwest and Central US would affect personal lines carriers. Shanker highlighted that Allstate report August catastrophe losses of $748 million, mostly from a single wind and hail event.

He said softening market conditions would challenge P&C premium growth and margins, but underwriting profitability was expected to remain healthy. ” “Broadly, it feels to us like the pricing cycle is in its later innings with more lines of business seeing pricing pressure build and certain areas that have seen the most pressure, such as property, have returns come into question,” Carletti said. ” The analyst said it was increasingly important to focus on companies insulated from the broader P&C headwinds, citing as an example Skyward Group.

As Skyward CEO Andrew Robinson recently told The Insurer TV, the specialty carrier has around half of its book in lines that are not subject to the P&C cycle. ” This is a contrast to a few years ago, when the consensus was that the 2015 to 2019 accident years were very troubled but the post-2019 years were much better, he said. “As time has progressed, viewpoints have deviated on the 2020—2021 time frame," Careletti said. BofA’s Shanker said casualty classes continue to show healthy rate increases amid concerns about elevated economic and social inflation.

“We believe carriers in our coverage are generally well reserved, investors will be cautious towards any material reserve charges,” he said. ” TD Cowen equity analyst Andrew Kligerman and his team said in a Q3 results preview that commercial lines were likely to weather pricing pressure for now, with carriers expected to post solid risk-adjusted returns for the quarter. “We expect flat to low-single digit premium growth and incremental pressure especially on underlying property combined ratios,” Kligerman said. ” Among large commercial lines insurers, TD Cowen favors The Hartford, Arch Capital and Axis Capital.

Kligerman said personal auto underlying combined ratios would “likely drift upwards” for the third quarter, although still better than targets. He said key themes for carriers for Q3 include whether property price declines are stabilizing or continuing to accelerate, whether casualty price gains are still trending ahead of loss cost inflation, and which carriers are able to post profitable growth in the softening price environment. Brokers Facing Lower Growth Challenge BofA’s Shanker said brokers would face comparatively lower growth headwinds from moderating property rates, with Q3 a smaller quarter for property placements.

“Nevertheless, organic growth will remain challenged as client companies delay projects with current heightened economic uncertainty,” said Shanker. ” TD Cowen’s Kligerman viewed AI disintermediation concerns as overblown and said he increasingly saw the technology as a potential productivity and margin tailwind. Kligerman said insurance brokers are his favored sub-sector. His favored stocks are Aon, Arthur J Gallagher and Brown & Brown, the latter of which TD Cowen recently initiated coverage on.

“We remain positive on brokers heading into 3Q26 earnings and expect mid-single-digit organic revenue growth on average and continued margins expansion despite pricing pressures. S. ” Kligerman said a key question will be whether brokers are able to post guided mid-single-digit organic revenue growth in the face of softening P&C pricing.