US insurers are expected to post relatively light catastrophe losses in Q1, though softer pricing trends and rising costs may weigh on earnings, BofA Securities said in a Tuesday note.
Catastrophe losses are projected to remain below historical averages which may provide near-term support for major insurers. Moderating property and casualty premium rate increases and ongoing claims inflation may pressure underwriting margins, according to the firm.
The brokerage also flagged rising expense pressures as insurers increase spending on technology, data infrastructure and AI initiatives. These investments support long-term competitiveness but near-term benefits are limited and may add to margin pressure in upcoming results, BofA said.
The brokerage expects a mixed Q1 backdrop for US insurers. Supportive catastrophe trends may be offset by slower pricing growth. Ongoing macro pressures and rising cost bases may also weigh across the sector, the note added.
BofA also updated select insurer price targets, lowering its target on AIG (AIG) to $79 while maintaining a neutral rating, raising Progressive's (PGR) target to $298 with a buy rating, and cutting Chubb's (CB) target to $271 while keeping an underperform rating.
Price: $78.00, Change: $+0.17, Percent Change: +0.22%