While the sector probably won't see any material benefit from tax reform or higher interest rates until 2018, some players are positioned better than others, says analyst Charles Sebaski.
He upgrades AIG and Arch Capital Group (NASDAQ:ACGL) to Outperform from Market Perform, and Brown & Brown (NYSE:BRO) to Market Perform from Underperform. The price targets on all 13 non-life names in his coverage units also get a boost.
Travelers (NYSE:TRV) is "best-in-class P&C underwriter," says Sebaski, and the prospect of lower taxes makes for a good entry point.
Sebaski's stance is notable for its contrast to that of RBC's Mark Dwelle, who late last week downgraded a number of P&C names in favor of life insurers.
With the stock price above $130, it's a "good time for investors to take their foot off the gas a little," says Charles Sebaski, downgrading Chubb (CB -0.2%) to Market Perform from Outperform. He remains bullish on the long-term prospects, but after a 25% Y/Y run higher, it's time to "wait for a better entry point."
Checking the rest of BMO's property & casualty coverage, Outperform-rated names are James River Group (JRVR +0.4%), Hanover Insurance (THG +0.5%), Arthur J. Gallagher (AJG +0.6%). Market Perform: AIG (AIG +0.6%), Travelers (TRV +0.1%), Aon (AON +0.6%), Brown & Brown (BRO -0.7%), Marsh & McLennan (MMC).