E&S Premiums Slip 6% as Property Pricing Softens – TD Cowen

TD Cowen has issued a report on the excess and surplus (E&S) insurance market, flagging a deceleration in premium growth tied to softer property pricing. The firm's analysis, titled Our Thoughts on the E&S Market, shows that combined premiums in the three largest stamping office states – California, Florida and Texas – fell 6% year on year in May 2026. That decline follows a 10% drop in April 2026, suggesting the sector has not yet found a floor.

The May 2026 Data: Premiums Down, Filings Up

TD Cowen reports that the 6% year-on-year decline in combined premiums for the three states was driven by divergent regional results. California premiums rose 5% year on year. That gain was more than offset by 11% declines in both Florida and Texas. The three-month rolling average has shifted to a 1% decline, reinforcing the view that momentum has softened compared with earlier periods.

Despite the premium decline, E&S filings across the three states rose 16% year on year in May 2026. TD Cowen observes that this remains broadly consistent with a relatively strong underlying trajectory. The divergence between filing growth and premium contraction suggests that insurers are writing more policies but at lower average prices. That pattern is typical of a softening market where volume masks margin compression.

The Mechanism: Pricing Pressure in Property Lines

TD Cowen attributes the easing growth primarily to softer pricing conditions within property insurance. Heightened competition and falling rates in property lines are the main mechanisms at work. The firm states that there is no clear evidence at this stage that a significant volume of business is returning to the admitted insurance market. That distinction matters: if business were migrating back to the standard market, the E&S slowdown would reflect structural share loss rather than cyclical pricing pressure.

The E&S market experienced a hard cycle from 2020 through 2023, driven by social inflation, nuclear verdicts, and reinsurance capacity constraints. That cycle attracted new capital and increased competition. The current slowdown is linked to softer pricing conditions, particularly in property insurance. More capacity chasing the same or slower-growing demand leads to rate reductions. Those reductions show up first in premium data, then in filing volumes, and eventually in loss ratios if the pricing proves inadequate.

Sector Read-Through: What This Means for E&S Underwriters

The three-state data from California, Florida and Texas accounts for close to two-thirds of total E&S premium volume, according to TD Cowen. That makes the monthly stamping office figures a reliable leading indicator for the broader sector. The softening property cycle is broad enough to affect most E&S-focused carriers. The divergence between California's 5% growth and the 11% declines in Florida and Texas suggests that geographic concentration matters. Carriers with heavy exposure to Florida wind and Texas property are under more pressure than those weighted toward California liability or professional lines.