Americas Insurance 3Q26 Preview Expect Mixed Results as The Cycle Softens Further

Equity Research 30 September 2026 | 4:06PM EDT

3Q26 Preview: Expect Mixed Results as The Cycle Softens Further

Over the course of 3Q26, P&C insurers (-2%) and insurance brokers (-2%) Robert Cox | underperformed the S&P 500 (+3%) amidst continued softening insurance cycle data Goldman Sachs & Co. LLC

points and at least partially renewed agentic/AI related disruption fears. That said, Jack Kendall | the group enters 3Q with some built-in earnings tailwinds from overall lighter Goldman Sachs & Co. LLC catastrophe activity, higher interest rates, and a favorable sequential mix shift Victoria Gong | towards faster growing casualty products. Growth has softened to more normal Goldman Sachs & Co. LLC levels for the industry, yet ROEs remain better than long-term averages. Investor focus is likely to be centered on 1) the magnitude and duration of softer insurance cycle conditions, 2) AI risks and opportunities, 3) capital deployment, 4) insight into macroeconomic conditions, and 5) stability of casualty reserves from recent accident years. By sub-sector we have a favorable bias towards brokers where we think in-line or slightly favorable results relative to expectations could result in solid stock reactions, given below prior soft market EV / Adj. EBITDA multiples. Within brokers, we favor Buy rated WTW/NP on margin/distribution momentum, respectively, and think Neutral rated BRO could be in for a more positive quarter. In Commercial lines, we favor WRB on predominantly casualty exposure and the strongest leverage to improving forward NII, while we favor PGR in Personal lines on solid growth, margin, and agentic AI positioning relative to peers.

Insurance Brokers/Capital-Light: Insurance brokers face a modestly decelerating operating environment in 3Q with GSe nominal/real GDP growth falling 80bps/30bps sequentially, partially offset by a favorable seasonal mix shift away from property CAT, which has been experiencing severe pricing declines. We model fairly stable average Retail broker organic growth of 4.2% (4.1% 2Q26), driven by sequential improvement at brokers with greater pricing exposure (AJG, BRO), and offset by sequential deceleration from more fee-based brokers (AON, MRSH, WTW); albeit at higher average organic growth levels. We expect a continuation of strength in large/data center construction with monthly nonresidential & nonbuilding construction starts value accelerating to +40% YoY in July/August vs +26% in 1H26, though M&A/capital markets activity is likely lighter QoQ with M&A deal count/value completed -16%/-1% vs +18%/+42% in 2Q26. The group enters 4Q trading below prior soft market multiples at 11.3x EV/Adj. EBITDA, (which is likely driven at least partially by renewed AI disruption fears) leading to our view that solid results are likely to be rewarded. We expect the primary focus will be on understanding the insurance cycle trajectory, followed by updates on perceived risks and opportunities

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Goldman Sachs Americas Insurance

Arch Capital Group (ACGL; Sell; TP: $95) 19

American International Group (AIG; Buy; TP: $88) 21

Allstate (ALL; Neutral; TP: $250) 23

Axis Capital (AXS; Neutral; TP: $104) 25

The Hartford Insurance Group (HIG; Buy; TP: $152) 29

Progressive (PGR; Buy; TP: $235) 31

Pelagos Insurance Capital (PLGO: Sell; TP: $21.50) 33

RenaissanceRe (RNR; Sell; TP: $312) 35

Travelers (TRV; Sell; TP: $350) 37

W.R. Berkley (WRB; Buy; TP: $79) 39

Accelerant (ARX; Not Rated) 41

Arthur J. Gallagher & Co. (AJG; Buy; TP: $277) 43

Brown & Brown (BRO; Neutral; TP: $68) 48

Marsh & McLennan (MRSH; Neutral; TP: $191) 49

Neptune Holdings (NP; Buy; TP: $35) 51

Ryan Specialty Group (RYAN; Neutral; TP: $45) 52

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