Jefferies Backs P&C Insurance Brokers as Preferred Play Through 2026

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Jefferies’ Sector View: Brokers Over Carriers

Investing.com — Jefferies is positioning property and casualty (P&C) insurance brokers as the preferred choice within the insurance universe heading into 2026. The firm argues that brokers should continue to outperform P&C carriers even as rate momentum across commercial lines loses some steam.

Analysts led by Andrew Andersen said they are maintaining a “positive broker bias amid rate moderation,” with a tilt toward larger platforms and brokers with significant exposure to large-account business. They expect organic growth to decelerate but remain resilient.

Impact of Moderating Commercial Pricing

The analysts noted that brokers have demonstrated an ability to sustain organic growth even as competition in pricing intensifies. Commercial pricing is projected to keep moderating into 2026, with property lines facing the most pronounced pressure, while casualty and specialty pricing are seen as comparatively more durable.

In this environment, Jefferies expects brokers to depend less on rate-driven benefits and more on advisory capabilities, operating efficiency, and targeted exposure to specific sectors to protect and extend growth.

Growth Drivers and Margin Dynamics

Jefferies highlighted several key factors expected to support the broker group:

• Advisory and value-added services
• Improved producer productivity
• Exposure to macro and sector themes such as data centers, M&A services, and healthcare inflation

“We favor brokers over carriers into 2026 and large account brokers within the group, as organic momentum mostly holds and select names benefit from macro/sector tailwinds (data centers, M&A svcs, healthcare inflation) and producer productivity which combined also helps drive margin expansion,” they wrote.

However, the analysts cautioned that margin expansion is expected to decelerate compared with recent years. They pointed to normalization in fiduciary income and contingent commissions, as well as the effects of opportunistic hiring and integration costs related to M&A, as factors that could weigh on profitability.

Capital Allocation and M&A Outlook

Jefferies observed that pipelines for tuck-in acquisitions remain active, and larger transactions are still possible. Even so, some brokers may emphasize share repurchases in the near term as a preferred use of capital.

Investor attention, according to the firm, is more heavily concentrated on brokers than on P&C carriers at this stage.

Top Picks Among Brokers and Insurtech Names

Within the commercial broker segment, Jefferies identified Aon and Willis Towers Watson as its top choices.

In the personal lines space, the analysts reiterated a Buy rating on Goosehead Insurance, calling it “the best way to play a softening personal lines insurance market” as easing pricing and improving carrier capacity bolster both new business and retention.

Jefferies also expressed a selectively constructive view on certain insurtech companies, reaffirming Buy ratings on Root and Hippo.

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