LIVE MARKETS-Insurance: rotation on the horizon?

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INSURANCE: ROTATION ON THE HORIZON?

European insurance .SXIP has enjoyed a strong run in 2025, with valuations hitting record highs, but investors are now pondering whether the rally can extend into next year.

BofA Global Research cautions that a turn in the pricing cycle could cap gains in 2026. Yet that does not mean investors should turn outright bearish.

"We should not catastrophise – the sector deserves to have re-rated, and there are still opportunities to be found," analysts at the U.S. bank say in a note this week.

Property & Casualty names may become a trading sector, rather than buy-and-hold, as pricing softens after a benign hurricane season, while Life insurers could stage a comeback after a decade out of favour.

"A normal yield curve and wider credit spreads are a profitable environment for Life insurers. Further, positioning is light...," they add.

Balance sheets remain strong, supporting healthy dividends and buybacks, and M&A could also emerge as a theme, they say. BofA has buy ratings on half the sector's market cap, with Prudential PRU.L and AXA AXAF.PA its top picks.

(Danilo Masoni)

EARLIER ON LIVE MARKETS:

EUROPE'S BUDGET HEADACHES CLICK HERE

RETAIL LIFTS STOXX 600 AFTER INDITEX RESULTS CLICK HERE

EUROPE BEFORE THE BELL: MODEST GAINS CLICK HERE

RISK-ON, RISK-OFF, RISK-ON CLICK HERE