Andrew Bary

Property and casualty insurance stocks were among the worst performers in the stock market Monday.

The selling could reflect profit-taking with some of the stocks recently trading at or near record highs. The group is historically defensive and investors have been rotating toward technology and other more "offensive" industry groups lately.

There also could be some investor concern about weakening pricing of property and casualty insurance policies in light of comments by White Mountains Insurance Group on Friday at its annual investor day.

A White Mountains executive noted that P&C pricing in certain areas like marine, energy, and property is "rolling," or declining. The entire industry had benefited from several years of strong premium growth, a so-called hard market.

In a client note Monday, Dowling & Partners, which follows the P&C insurance industry, summarized the comments by Ark, the largest insurance division within White Mountains. Ark "noted that rates are "rolling" across most classes of business and are expected to decline 3-4% for the year (-2% in Q1 on a risk-adjusted basis). Its largest line, property (re)insurance (49% of 2024 gross written premiums) is softening with rates down 4-5," Dowling analysts noted.

Goldman Sachs analysts also put out a long report Monday on the coming growth in autonomous vehicles, including robo-taxis, and the firm expects a modest impact on auto insurers from lower accident frequencies.

The Goldman analysts led by Mark Delaney see modest real, or inflation-adjusted, growth in auto insurance premiums for the next 10 to 15 years before a potentially more significant impact from autonomous vehicles.

Industry leader Chubb was down 1.4% to $289.80 on Monday; Allstate was off 3% to $200.77; American International Group declined 2.5% to $85.18; Progressive dropped 2.9% to $271.31; reinsurer RenaissanceRe Holding was off 1.2% to $293.88 and insurance broker Aon fell 4.7% to $353.83.

Insurance brokers were the worst-performing industry group in the S&P 500 on Monday, according to Bloomberg data. Insurance brokerage stocks have excellent long-term records as they have benefited from rising premiums while taking none of the underwriting risk. If premiums broadly head lower, the brokers could suffer. They also carry higher valuations based on price/earnings ratios than P&C insurers.

So-called personal lines insurers such as Allstate and Progressive have had strong results in auto insurance and investors are trying to assess how long that will last. Progressive, for instance, had an auto underwriting profit margin of over 15% in April while Geico, owned by Berkshire Hathaway, had a similar margin in the first quarter.

Both seek to underwrite with at least a 4% margin and are way above that now. Investors may question whether currently outsize margins are sustainable.

Write to Andrew Bary at andrew.bary@barrons.com

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June 09, 2025 18:51 ET (22:51 GMT)

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