Investment Rating - The report maintains an "Attractive" industry view for the Property & Casualty (P&C) sector in North America [5] Core Insights - The impact of tariffs is expected to introduce more volatility in loss reserving, particularly affecting property lines of business [1][2] - Companies with significant exposure to property reserves, such as Allstate, Progressive, Hanover, and Travelers, are likely to experience greater reserve fluctuations due to tariff and inflation pressures [2][23] - The overall P&C industry reserves have been growing above 5% since 2022, with expectations of less favorable reserve releases in the future due to increased uncertainty from tariffs and inflation [11][14] Summary by Relevant Sections Loss Reserving Analysis - The report indicates that the current macroeconomic environment, characterized by tariff disputes and inflation fears, is likely to lead to increased fluctuations in overall P&C reserving estimates [7][11] - Historical data shows that initial reserve estimates have faced challenges during periods of economic uncertainty, with the need for reserve strengthening anticipated [7][11] Homeowners Insurance - Claim severity trends for homeowners insurance may increase due to tariff impacts, leading to higher initial loss picks for future accident years [10][30] - The report does not expect significant adverse reserve development for homeowners insurance due to its short-tailed nature, although overall IBNR reserve levels are expected to rise [10][30] Auto Physical Damage - Auto Physical Damage reserves are expected to develop favorably, supported by higher rates and improved profitability, despite potential tariff impacts on repair costs [41][42] - The report notes that while initial loss picks may spike due to tariffs, the overall impact is viewed as manageable [41][42] Commercial Multi-Peril - The report highlights that Commercial Multi-Peril (CMP) reserve development may see a wider range of outcomes as the market transitions, with increased conservatism in loss picks due to social inflation [12][51] - Historical trends indicate that CMP reserves have been affected by hard and soft market cycles, complicating future reserving forecasts [49][52] Overall Industry Trends - The P&C industry is expected to face elevated headwinds for several years, particularly as personal auto enters a more competitive environment and inflation pressures resurface [11][12] - The report emphasizes that companies relying on favorable property reserves to offset adverse casualty reserves will be more vulnerable to the impacts of tariffs and inflation [23][24]