U.S. Insurance 2Q26 Preview: Softening Cycle Becoming More Apparent, with Earnings Resilience and Expectations for a Growth Bottom Coexisting

Overview

This report is Goldman Sachs' preview of 2Q26 earnings for the Americas insurance industry, covering P&C insurers, reinsurers, personal insurers, insurance brokers, and capital-light insurance services companies. The core view is that softening in the insurance cycle is becoming more evident in pricing and growth, particularly as property, international commercial, and reinsurance renewal pricing comes under pressure; however, short-term earnings have not deteriorated in tandem, and most insurers' EPS and book value growth may still benefit from lower catastrophe losses, the realization of prior rate increases, and relatively healthy ROE.

Core views

The report remains cautious on industry growth: commercial P&C renewal premium changes are expected to decline 100-150bp, while the combined impact of pricing and exposure may still result in a sequential negative impact of approximately 50-100bp after new business; the retail brokerage organic growth estimate is 3.5%, approximately 40bp below the market. At the same time, the report believes property pricing has entered a more pronounced downward phase, with North American/global property pricing expected to decline approximately 2 percentage points, reinsurance portfolio pricing under pressure by approximately 2-4 percentage points, and international commercial pricing potentially declining 75-100bp. Earnings remain more resilient, as commercial re/insurers benefit from below-average catastrophe losses and manageable non-catastrophe weather losses. Personal insurers are also expected to maintain strong profitability, although below-expected growth may limit the scope for earnings revisions upward.

Analysis framework

Goldman Sachs cross-validates company earnings expectations against FactSet EPS consensus estimates, Visible Alpha key metrics, management commentary, pricing indicators from AJG/IVANS/Aon and others, state-level E&S data, macroeconomic forecasts, non-residential construction starts, M&A/IPO activity, and catastrophe model/broker loss estimates to assess growth, pricing, underwriting margins, capital deployment, and valuation risks across sub-sectors in 2Q26.

Methodology notes

• Earnings forecastsGSe vs. Consensus

  Comparison of Goldman Sachs estimates with market consensus

  The report compares Goldman Sachs estimates for 2Q26, 2026E, 2027E, and 2028E EPS with FactSet or Visible Alpha consensus estimates to identify potential EPS upside or downside risks.

• Industry cycleInsurance pricing cycle analysis

  Commercial P&C pricing, renewal premium changes, and exposure growth

  The report assesses the transmission of a soft market to growth and margins through pricing changes in property, casualty, specialty, cyber, reinsurance, and international markets.

• Risk modelingCatastrophe loss scenario analysis

  Natural catastrophe and non-catastrophe weather losses

  Using data from insurance brokers and catastrophe modeling companies, the report estimates global insured catastrophe losses of approximately $24 billion in 2Q26, or approximately 65-70% of the five-year 2Q average.

• Macro mappingRead-through from GDP, construction starts, and capital markets activity

  Impact of macro variables on insurance exposure and brokerage revenue

  The report uses nominal GDP, real GDP, non-residential construction starts, wages, M&A, and IPO activity to assess growth momentum in renewal exposures, new business, and advisory/brokerage revenue.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AON

  Insurance brokerage/capital-light, Buy, TP $375

  Strengths

  Viewed as relatively well positioned among large brokers heading into 2Q26, with lower exposure to P&C pricing pressure and some company-specific growth support.

  Weaknesses

  Overall brokerage organic growth remains affected by slower commercial P&C pricing and weakness in international markets.

  Comparison

  The report says Buy-rated AON has the strongest positioning among large brokerage companies.

  Risks

  If the soft market continues into 2027, both the growth model and valuation rerating assumptions could come under pressure.

• ARX / NP

  Capital-light/insurance services, Buy, ARX TP $22, NP TP $36

  Strengths

  The report believes both face relatively less P&C pricing pressure and benefit from company-specific growth tailwinds.

  Weaknesses

  They remain in an environment where valuations of insurance services and capital-light businesses are sensitive to growth.

  Comparison

  Compared with more traditional brokerage businesses, the report identifies ARX and NP as relatively well-positioned names for 2Q26.

  Risks

  Insufficient growth delivery or renewed market repricing of the duration of the soft cycle.

• HIG / WRB

  Commercial insurers, Buy, HIG TP $152, WRB TP $78

  Strengths

  Goldman Sachs expects HIG and WRB to show greater resilience in pricing, growth, and margins, given their greater exposure to casualty lines and SME customers, with stronger prospective ROE sustainability.

  Weaknesses

  They are still not fully immune to the overall slowdown in commercial P&C pricing.

  Comparison

  Relative to AIG/CB, which have greater exposure to large accounts and specialty lines, the report believes HIG/WRB face less sequential pricing deceleration pressure in 2Q26.

  Risks

  Casualty reserves, macroeconomic slowdown, and capital deployment below expectations.

• ALL

  Personal insurance, Neutral, TP $250

  Strengths

  The report believes ALL is relatively well positioned heading into earnings; strong core margins and prior-year reserve development may support capital deployment.

  Weaknesses

  The stock has performed strongly recently, and below-expected personal insurance growth may limit the scope for upward earnings revisions.

  Comparison

  Compared with PGR, the report is more constructive on ALL heading into earnings and maintains a neutral bias toward PGR.

  Risks

  Increasing competition, net premium growth below expectations, and marginal deterioration in personal auto insurance margins.

• AIG / CB

  Large commercial insurers, Buy, AIG TP $88, CB TP $386

  Strengths

  Hardening pricing in international and Japanese markets may provide partial support to AIG and CB, while overall margins remain supported by the realization of prior rate increases.

  Weaknesses

  The report expects large-account and specialty insurers to face greater sequential pricing deceleration than SME-oriented companies.

  Comparison

  The report notes that AIG/CB may face more pronounced pricing deceleration this quarter than HIG/TRV/WRB.

  Risks

  Weakening global property and international commercial pricing, reserve stability, and AI-related risks.

• ACGL / PLGO / RNR

  Reinsurance, Sell, ACGL TP $93, PLGO TP $22.5, RNR TP $304

  Strengths

  Below-average catastrophe losses may provide short-term support for reinsurance earnings.

  Weaknesses

  Reinsurance renewal pricing is expected to face approximately 2-4 percentage points of sequential pressure, particularly in Property-Cat Treaty and Property Quota Share.

  Comparison

  Relative to SME-oriented commercial insurers, the reinsurance segment is more directly exposed to competition in property catastrophe renewal pricing.

  Risks

  Competition in property reinsurance pricing, a rebound in catastrophe losses, and capital returns below expectations.

Key data

• Commercial P&C pricing changeDown 100-150bp sequentiallyDriven primarily by slower property and international pricing, as well as a higher mix of property/catastrophe renewals in 2Q.
• Combined impact of pricing and exposureApproximately 50-100bp negative impactAfter incorporating new business, pricing and exposure are still expected to weigh on total growth sequentially.
• Retail brokerage organic growthGSe 3.5%, approximately 40bp below the marketAffected by continued pricing deceleration, partly offset by exposure growth and non-residential construction activity.
• North American/global property pricingExpected to decline approximately 2 percentage pointsThe report notes that AJG global property rates were down 9% QTD and U.S. retail property pricing was down 11% QTD.
• Reinsurance pricing pressurePortfolio pricing under sequential pressure of approximately 2-4 percentage pointsPrimarily from weaker pricing in Property-Cat Treaty and Property Quota Share.
• International commercial pricingExpected to decline approximately 75-100bpAJG's major non-North American retail markets showed average sequential pricing deceleration of approximately 4 percentage points.
• 2Q26 global insured catastrophe lossesApproximately $24 billionApproximately 65-70% of the five-year 2Q average, including approximately $21 billion in the U.S. and $3 billion internationally.
• U.S. nominal GDP and real GDPNominal GDP +6.7%, real GDP +2.3%Goldman's economics team expects U.S. nominal GDP growth in 2Q26 to accelerate 60bp year over year from 1Q26, while real GDP growth slows by approximately 40bp year over year.
• State-level E&S market dataTX -8.7%, FL -9.6%, CA -7.6%E&S premiums in the three states declined 8.6% year over year during the first two months of 2Q26, slowing significantly from approximately 6% year-over-year growth in 1Q26.

Impact & implications

For investors, the report suggests that the industry's near-term trading focus will shift from earnings resilience alone to the debate over whether downward growth revisions and valuation rerating can take hold. Insurers may deliver solid EPS as low catastrophe losses and underwriting margins remain supportive, but if pricing softening continues into 2027, growth expectations and the scope for valuation expansion will be constrained. Brokerage valuations have already declined, potentially attracting discussions of bottom-fishing allocations, but Goldman Sachs believes the duration of the soft market remains the key uncertainty.

Risks

• Commercial P&C pricing may soften by more or for longer than expected, leading to further downward revisions to growth and valuations.
• Intensifying competition in property, international commercial, and reinsurance pricing may depress renewal premium changes and net premium growth.
• Casualty reserves may become unstable, particularly with adverse development in recent accident years.
• Catastrophe or non-catastrophe weather losses may exceed current estimates, eroding 2Q26 underwriting profits.
• Slower macroeconomic growth, weaker employment, and reduced construction activity may affect exposure growth and new business.
• The impact of AI-related risks, opportunities, and costs remains unclear and could alter expectations for underwriting, claims, and operating efficiency.
• Capital deployment below investor expectations could weaken support for EPS and total returns.

What to watch

• Actual sequential changes in 2Q26 property, international commercial, and reinsurance renewal pricing.
• Whether brokerage organic growth approaches Goldman Sachs' cautious 3.5% forecast or validates the market's more optimistic expectations.
• Whether Goldman Sachs' preferred companies, including HIG, WRB, and ALL, demonstrate stronger growth, margin, and capital deployment resilience.
• Whether AIG, CB, TRV, BRO, and AXS show the pricing deceleration or below-expected growth risks highlighted by Goldman Sachs.
• The ultimate impact of severe convective storms in June and other catastrophe events on the 2Q26 loss ratio.
• Management commentary on the duration of the soft market in 2027, share repurchases, AI applications, and reserve stability.
• Whether non-residential construction, data centers, and utility projects continue to support commercial insurance exposure growth.