The Zacks Property and Casualty Insurance (P&C) industry is witnessing softer pricing after several years of improvement. However, it is likely to benefit from prudent underwriting, exposure growth and accelerated digitalization. Industry players like RenaissanceRe (RNR Quick QuoteRNR - Free Report) , Axis Capital Holding (AXS Quick QuoteAXS - Free Report) , First American Financial (FAF Quick QuoteFAF - Free Report) , Mercury General (MCY Quick QuoteMCY - Free Report) and Palomar Holdings (PLMR Quick QuotePLMR - Free Report) are poised to grow despite all odds. Given an active catastrophe environment, the policy renewal rate should accelerate. The increasing adoption of technology and the emergence of insurtech help the industry players function smoothly.

The Fed has been lowering interest rates and has hinted at the possibility of more throughout the year. Though insurers are direct beneficiaries of an improved rate environment and rate cuts are headwinds, investment income is expected to remain strong, given insurers’ diverse investment portfolio as well as continued growth of private market investments. Also, an investment portfolio skewed toward fixed-income maturities provides some upside.  The imposition of tariffs by President Trump, as well as higher inflation, will have an impact on pricing. Nonetheless, an improvement in surplus and accelerated economic activities set the stage for a better M&A environment. Per Fitch Ratings, personal auto is expected to stay strong, and, coupled with better investment results and lower claims, should fuel insurers' performance.  

About the Industry

The Zacks Property and Casualty Insurance industry comprises companies that provide commercial and personal property insurance, and casualty insurance products and services. Such insurance helps to safeguard property in case of any natural or man-made disasters. Some industry players also provide liability coverage. The insurance coverage offered also includes automobiles, professional risk, marine, excess casualty, aviation, personal accident, commercial multi-peril, and professional indemnity and surety. Premiums are the primary source of revenues for these insurers. Better pricing and increased exposure drive premiums. These companies invest a portion of premiums to meet their commitments to policyholders. However, rate cuts by the Fed pose downside risk.

4 Trends Shaping the Future of the Property and Casualty Insurance Industry

Proper pricing to help navigate claims: Catastrophic events continue to keep insurers under pressure, often prompting rate hikes to sustain claims payouts. However, Marsh’s Global Insurance Market Index reported a 4% decline in global commercial insurance rates in the fourth quarter of 2025, marking six consecutive quarters of softening and reflecting heightened competition, a favorable loss environment, and improved reinsurance pricing across regions and product lines. Well-calibrated pricing remains critical, as prudently priced portfolios enhance loss ratios and release capital for more efficient claims servicing. Fitch Ratings highlights strong momentum in personal auto insurance, supported by better investment returns and fewer claims, while S&P Global expects underwriting profits to stabilize as insurers balance growth with steady or slightly reduced rates. Deloitte projects global premiums to grow nearly sixfold to $722 billion by 2030, with China and North America dominating. Swiss Re forecasts 4% premium growth in 2026. Thus, prudent pricing not only drives premium but also a resilient claims ecosystem.

Catastrophe loss induces volatility in underwriting profits: The property and casualty insurance industry is susceptible to catastrophe events, which drag down underwriting profits. In 2025, insured losses from natural catastrophes approximated $107 billion. Though the combined ratio improved in 2025, Swiss Re estimates a deterioration of 50 basis points to 99% in 2026. Underwriting profitability is expected to be under pressure, primarily due to soft performance in personal lines, which are expected to witness higher catastrophe losses per Insurance Information Institute and Milliman. Exposure growth, better pricing, prudent underwriting and favorable reserve development will help withstand the blow. Also, frequent occurrences of natural disasters should accelerate the policy renewal rate. 

Merger and acquisitions: Consolidation in the property and casualty industry is likely to continue as players look to diversify their operations into new business lines and geography. Buying businesses along the same lines will also continue as players look to gain market share and grow in their niche areas. With a sturdy capital level, the industry is witnessing a number of mergers, acquisitions and consolidations.

Increased adoption of technology: The industry is witnessing increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation that expedite business operations and save costs. The industry has also witnessed the emergence of insurtechs or technology-led insurers. The focus of insurtech is mainly on the property and casualty insurance industry. Insurers continue to invest heavily in technology, generative AI in particular, as it is expected to improve basis points, scale and efficiencies. However, the use of technology poses cyber threats.

Zacks Industry Rank Indicates Bright Prospects

The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects in the near term. The Zacks Property and Casualty Insurance industry, which is housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #41, which places it in the top 17% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregates. Earnings estimates for 2026 have increased year over year.

Before we present a few property and casualty stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture. 

Industry Underperforms Sector and the S&P 500

The Property and Casualty Insurance industry has underperformed its sector and the Zacks S&P 500 composite in a year. The stocks in this industry have collectively lost 7.2% against the sector’s increase of 14.3% and the Zacks S&P 500 composite’s increase of 24.7% in the said time frame.

1-Year Price Performance

Current Valuation

On the basis of the trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 1.4X compared with the S&P 500’s 7.75X and the sector’s 4.08X.

Over the past five years, the industry has traded as high as 1.73X, as low as 1.17X and at the median of 1.45X.

Price-to-Book (P/B) Ratio (TTM)

Price-to-Book (P/B) Ratio (TTM)

5 Property and Casualty Insurance Stocks to Bet On

Here, we are discussing one Zacks Rank #1 (Strong Buy) stock and four Zacks Rank #2 (Buy) stocks from the P&C Insurance industry. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercury General: Headquartered in Los Angeles, Mercury General is an insurance holding company. It is primarily engaged in writing personal automobile lines of business and provides related property and casualty insurance products. Mercury General has been gaining ground by relying on a set of core organic strengths. The Property and Casualty segment has also held up well, signaling a stable backdrop for the company’s operations. These organic drivers are lifting Mercury General’s top line and shaping the path for continued expansion. Mercury General’s strong liquidity position further supports its growth. It sports a Zacks Rank #1.

The Zacks Consensus Estimate for MCY’s 2026 earnings suggests 13.9% year-over-year growth. It delivered a four-quarter average earnings surprise of 55.08%.  It has a VGM Score of A.

Price and Consensus: MCY

RenaissanceRe: Based in Pembroke, Bermuda, RenaissanceRe Holdings Ltd. provides property catastrophe reinsurance globally, primarily through excess-of-loss coverage, along with select specialty reinsurance solutions. This Zacks Rank #2 company is positioned for growth supported by a diversified earnings mix spanning underwriting, fee and investment income. Strong cash generation, along with strategic acquisitions and partnerships, has expanded its scale, geographic reach and business mix. This diversification reduces dependence on any single segment, enhances resilience against large loss events and supports more stable, long-term returns.

The Zacks Consensus Estimate for 2027 earnings suggests 11.9% year-over-year growth. It delivered an earnings surprise in the last three reported quarters.  It has a VGM Score of B. The expected long-term earnings growth rate is pegged at 11.4%. The consensus estimate for 2026 and 2027 earnings has moved 0.5% and 1.3% north, respectively, in the past 30 days.

Price and Consensus: RNR

Axis Capital Holding: This Bermuda-based firm is the holding company for the AXIS group of companies. It aims to be a leading specialty underwriter and thus focuses on growth areas, including wholesale insurance and lower middle markets. Lowering risk exposure while concentrating on accident and health, excess and surplus property, casualty, credit and surety, and specialty reinsurance lines bodes well for growth. AXIS Capital stays focused on expanding digital capabilities to create new business growth in desirable and smaller accounts. This Zacks Rank #2 insurer boasts one of the highest dividend yields among its peers and has hiked its dividend for 18 straight years.

The Zacks Consensus Estimate for AXS’ 2026 and 2027 earnings suggests 2.9% and 8.6% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 earnings has moved 0.5% and 0.3% north, respectively, in the past 30 days. The company delivered a four-quarter average earnings surprise of 15.81%.  The expected long-term earnings growth rate is pegged at 3.4%.

Price and Consensus: AXS

First American Financial: Headquartered in Santa Ana, CA, First American Financial serves a broad range of clients involved in residential and commercial real estate transactions, including homebuyers, lenders and property professionals. The company is well-positioned to benefit from rising demand for first-time home purchases, particularly among millennials. Its leadership in title data—supported by proprietary data capabilities, strong distribution networks, disciplined underwriting and ongoing technology investments—underpins long-term growth.  FAF, carrying a Zacks Rank #2, is focused on enhancing its core offerings, expanding its data and valuation businesses, and improving efficiency through title plant expansion and upgraded technology solutions.

The Zacks Consensus Estimate for FAF’s 2026 and 2027 earnings suggests 5.5% and 7.9% year-over-year growth, respectively. The consensus estimate for 2026 and 2027 earnings has moved 3 cents and 4 cents north, respectively, in the past 30 days. The company delivered a four-quarter average earnings surprise of 22.95%.  The expected long-term earnings growth rate is pegged at 15.2%. It has a VGM Score of A.

Price and Consensus: FAF

Palomar Holdings: Headquartered in La Jolla, CA, Palomar Holdings is a fast-growing, profitable insurer specializing in catastrophe coverage for residential and commercial properties. Its fee-based platform, PLMR-FRONT, is expected to support medium-term growth by adding a stable revenue stream. The company also sees significant long-term potential in the Surety market, which, like crop insurance, offers diversification due to its low correlation with traditional P&C cycles. With rising policy volumes, strong retention, geographic and distribution expansion, and new partnerships, Palomar is well-positioned for sustained growth. It currently holds a Zacks Rank #2.

The Zacks Consensus Estimate for PLMR’s 2026 and 2027 earnings suggests 22.5% and 13.4% year-over-year growth, respectively. The consensus estimate for 2027 earnings has moved 1 cent north in the past 30 days. The company delivered a four-quarter average earnings surprise of 14.19%.  

Price and Consensus: PLMR