Key insights
- RBC Capital anticipates limited growth for US insurance companies in Q1 2026, offset by lower catastrophe losses. They expect strong capital return via buybacks. The firm cut more estimates than it raised, citing growth concerns for brokers, especially those with reinsurance operations. They favor AXS and see potential upside in SIGI, while preferring RYAN among brokers but remain cautious on property headwinds.
Investing.com - RBC Capital updated estimates ahead of the first-quarter 2026 earnings season for US insurance companies, which begins next Thursday with reports from Marsh & McLennan and Travelers.
RBC Capital analyst Rowland Mayor said the firm sees limited growth opportunities and core loss ratio compression for carriers offset by significant year-over-year reductions in first-quarter catastrophe losses due to lack of wildfires. The firm expects strong capital return as carriers look to offload excess capital as competition ramps and stocks remain reasonably priced for current return on equity levels.
RBC Capital cut more estimates than it raised across the sector. For carriers, the firm made modest tweaks primarily on the growth side, with some names seeing increased buyback assumptions or lowered core margin assumptions to reflect Iran impacts. Brokers saw adjustments primarily to growth drivers including acquired and organic revenues to reflect reinsurance dynamics and merger-and-acquisition volatility.
The firm said it remains cautious about potential negative growth surprises for brokers, particularly at names with large reinsurance brokerage operations. Organic growth is unlikely to accelerate in the first quarter and the firm sees more risk to compression and potential guidance cuts than upside.
RBC Capital said its favorite carrier idea remains Axis Capital Holdings (NYSE:AXS), while it sees potential for positive surprises at Selective Insurance Group (NASDAQ:SIGI) if reserve additions are complete. For brokers, the firm prefers Ryan Specialty Holdings (NYSE:RYAN) but remains cautious on first-half 2026 property headwinds.
In other recent news, TWFG Insurance reported impressive fourth-quarter earnings, significantly surpassing analyst expectations. The company announced an earnings per share (EPS) of $0.30, which was 76.47% higher than the forecasted $0.17. Additionally, TWFG reported a revenue of $68.6 million, showcasing its strong financial performance. Following the earnings report, Piper Sandler reiterated its Overweight rating on TWFG Insurance, maintaining a price target of $24. The firm highlighted concerns about artificial intelligence potentially disrupting the insurance broker industry but remained optimistic about TWFG. Meanwhile, Morgan Stanley adjusted its financial model after the earnings call, lowering its price target from $31 to $28, while maintaining an Equalweight rating. These developments indicate differing analyst perspectives on TWFG’s future prospects. Investors are closely monitoring how these factors will influence the company’s performance moving forward.
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