Sandler turns cautious on P&C insurers

The property-casualty insurance cycle is "petering out," says the team, noting "outright softening" in reinsurance pricing, a leveling out in commercial-insurance price gains, decelerating personal line pricing, and flat auto-insurance prices (home-insurance prices remain on the rise).

Still, Sandler's Q3 estimates remain above consensus, mostly because of the lack of catastrophe losses, and the firm has Buy ratings on ACE, AIG, ALL, TRV, and XL.

American Financial (AFG -0.7%) is downgraded to Hold - a valuation call after a big run has the stock near Sandler's $58 price target.

Price targets on ProAssurance (PRA -1.3%) and State Auto Financial (STFC -0.5%) are cut $2 to $47 and $1 to $20, respectively.

Relevant ETFs: KIE, IAK, KBWP, KBWI.

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