Key Moments
- Bank of America analysts reported that insurance shares have lagged the broader market following the April 2025 tariff news.
- The sector has been trading below historical valuation levels as investors focus on margin normalization risks instead of strong earnings.
- Bank of America highlighted Allstate (NYSE:ALL) and Progressive (NYSE:PGR) as key beneficiaries if sentiment toward insurance improves.
Valuation Pressure and Market Backdrop
Bank of America analysts observed that insurance stocks have trailed the wider equity market since the April 2025 tariff announcements and now see indications that this trend could reverse.
According to the firm, the group has been priced beneath its usual valuation ranges as investors concentrate on the possibility of future margin normalization rather than the sector’s recent strong earnings performance. The analysts said the space has been positioned between peak underwriting margins and an equity market that currently favors secular growth stories.
Lower-Beta Profile Out of Favor in a Momentum Market
Bank of America described insurance names as typically exhibiting low beta, modest trading activity and limited short interest. Active managers have been steering away from those features in the current market environment. While such characteristics can help protect the downside during periods of market stress, they become a handicap in momentum-driven conditions where investors prioritize higher-growth exposures.
Stock Selection Within the Sector
The analysts cautioned that the performance of a single stock should not be extrapolated to represent an entire insurance subsector. They cited Brown & Brown (NYSE:BRO), which they called the weakest performer among large-cap U.S. insurance stocks, as an example. BRO’s recent sharp rally contrasted with more subdued moves in Aon (NYSE:AON), Marsh McLennan (NYSE:MMC) and Willis Towers Watson (NASDAQ:WTW).
Bank of America suggested that the strength in BRO may reflect the establishment of a valuation floor for that particular stock rather than signaling a broad-based rebound across the sector.
| Company | Ticker | Analyst Commentary |
|---|---|---|
| Brown & Brown | NYSE:BRO | Recent rally after being the weakest large-cap U.S. insurance performer; may have reached a valuation floor. |
| Aon | NYSE:AON | More restrained share performance compared with BRO. |
| Marsh McLennan | NYSE:MMC | More restrained share performance compared with BRO. |
| Willis Towers Watson | NASDAQ:WTW | More restrained share performance compared with BRO. |
Allstate and Progressive in Focus
Within this backdrop, Bank of America highlighted Allstate (NYSE:ALL) and Progressive (NYSE:PGR) as standouts that have continued to surpass earnings expectations while still facing investor doubts about how long current margin levels can be maintained.
The analysts noted that Progressive has been one of the sector’s most notable underperformers outside of the broker group, leading to compressed valuation multiples for the stock.
| Company | Ticker | Key Analyst Observations |
|---|---|---|
| Allstate | NYSE:ALL | Regularly beats earnings estimates by wide margins and gains market share amid skepticism on margin durability. |
| Progressive | NYSE:PGR | Significant sector underperformer outside brokers; valuation multiples compressed despite strong earnings and market share gains. |
Earnings Outperformance and Sentiment Upside
Bank of America emphasized that both Allstate and Progressive have consistently delivered earnings results that exceed forecasts by substantial amounts while also increasing their market presence. The firm said the combination of recurring upside to earnings, earlier share price underperformance and currently low valuations creates a setup in which any shift toward more favorable sentiment could be underpinned by fundamentals.
Looking across the industry, the analysts indicated they expect personal lines carriers to perform better than multi-line property and casualty insurers and insurance brokers.
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