Insurers Are Buying Back More Stock as Pricing Softens

In the first half of 2026, Progressive (NYSE: PGR) bought back roughly $1 billion worth of its own stock. Chubb (NYSE: CB) bought back $1.37 billion in shares in the second quarter alone (bringing its first-half repurchases to $2.12 billion). Those numbers make Prudential's (NYSE: PRU) $250 million in second-quarter share repurchases sound like chump change, even though that's still a massive amount of cash to devote to a stock buyback.

Stock buybacks are often pitched as a way to return value to shareholders, and they are. However, there's another issue to consider here that may be just as important: Property and casualty insurance pricing is softening.

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What does a buyback do?

When a company buys back its own stock, the number of shares in the market decreases. That sounds simple, but it's worth putting some numbers on this with a simple example. If a company has 100 shares and buys back 10, then there are only 90 shares left for investors to trade.

That has a significant impact on any financial measures based on shares. For example, if the company earns $100 and it has 100 shares, then earning per share are $1. If that share count falls to 90 and it still earns $100, then earnings per share improves 11% to $1.11. That said, if earnings fall, stock buybacks remain beneficial. An earnings drop to $90, along with that 10 share buyback, would keep earnings per share at $1.

But there's an important middle ground. If earnings only dropped to $95, the 10-share buyback would leave the company with earnings per share of roughly $1.05. In other words, a moderate drop in earnings could still lead to higher earnings per share, with the reduction in the share count effectively offsetting the impact of a weakening business environment. Now it's time to start looking at the insurers and their stock buybacks.

The P&C insurance market is getting more competitive

In a recent industry report, Marsh estimated that global insurance rates fell 6% in the second quarter. That said, casualty rates were estimated to have increased by 2%, while property rates dropped by a fairly sizable 12%. Property is typically a major line of business for most public P&C insurance companies.

What's going on, according to Marsh, is that after several strong years, companies are competing more aggressively, including on price. That's a fairly typical cycle in the insurance industry. Absent any large weather events or other disasters, pricing power is likely to remain under pressure.

To give a specific example, Progressive's combined ratio increased to 86.8% in July, up 1.5 percentage points from a year ago. A combined ratio is a measure of profitability, comparing an insurance company's costs (operating costs and claims) to the premiums it collects. A number below 100% indicates a company is making a profit. So the 1.5 percentage-point increase indicates that Progressive's profitability is weakening.

Chubb's second-quarter results show that its combined ratio remained flat year over year at 81.9%. However, if property and casualty pricing is getting more competitive, buying back stock could help protect earnings from any potential business weakness in the future. So it probably isn't shocking that two insurers bought back huge amounts of stock in the first half of 2026.

Notably, Prudential's buyback was much smaller. Prudential primarily sells life insurance, and its business continues to perform very well, buoyed by an asset management business benefiting from a strong stock market. You could argue that it simply doesn't have the same need to buy back shares as a property and casualty insurer like Chubb and Progressive.

Chubb and Progressive are likely protecting earnings growth

Buying back shares is a way to return cash to shareholders without creating an ongoing obligation, unlike a dividend increase. So Chubb and Progressive are acting in a shareholder-friendly manner. However, the large stock buybacks will also help support earnings as the property and casualty sector gets more competitive, so there's more to the story here. And life insurance-focused Prudential's smaller buyback could be the example that shows what's really going on in the property and casualty insurance space.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.