Bank of America’s recent analysis of the insurance agents and brokers sector underscores how technology adoption and a focus on complex risk are shaping competitive differentiation. The firm identifies companies that appear better insulated from automation, particularly those whose businesses concentrate on intricate underwriting and value-added services rather than simple, low-sophistication policies.
Below are the key companies Bank of America highlights and the strategic rationale behind their placement in the bank’s ranking.
1. Baldwin Partners - Top-ranked for embedded and technology-led solutions
Bank of America elevates Baldwin Partners to the top of its list, citing the company’s embedded insurance and technology offerings as drivers of market efficiency. The bank frames Baldwin’s approach as one that helps lower friction in distribution rather than extracting outsized margins.
However, the narrative has grown more complex after Baldwin’s recent corporate moves. The firm completed an acquisition of CAC Group, increasing its exposure to traditional commission-based brokerage operations. Bank of America notes this development complicates the story even as it observes a valuation dynamic it views as attractive: Baldwin is trading at what the bank describes as a "material discount to the cost it took to assemble these businesses together." In the bank’s view, a sum-of-the-parts appraisal yields a total value materially above the current share price.
Separately, the Baldwin Group announced acquisitions of Obie, a real estate insurance business, and Philadelphia-based Capstone Group. Following the merger with CAC Group, BofA Securities raised its price target on the company.
2. Ryan Specialty - Positioned around hard-to-place wholesale risks
Ryan Specialty ranks second in Bank of America’s assessment. The bank highlights Ryan’s focus on wholesale markets and hard-to-place risks that typically require significant human judgment and intervention. That emphasis on complexity, Bank of America argues, makes Ryan less vulnerable to AI disruption that primarily threatens simpler policies.
The analysis suggests the advent of AI could accentuate the separation between straightforward, commoditized risks and intricate, bespoke exposures. That dynamic may actually expand Ryan’s addressable market even if the overall commission pool compresses. Ryan’s proprietary technology and underwriting capabilities are cited as additional defensive elements.
Ryan Specialty recently closed its acquisition of Canadian underwriter Stewart Specialty Risk Underwriting Ltd. (SSRU). Analyst coverage activity followed, with Mizuho and Jefferies initiating coverage at Neutral and Hold, respectively, while TD Cowen reiterated a Buy rating.
3. Progressive (PGR) - Bank of America’s potential AI frontrunner
Progressive is singled out by Bank of America as possibly "the one true A.I. winner" within the bank’s coverage universe. The bank assigns a 12-month price objective of $329, which it derives by applying forward S&P 500 price-to-earnings multiples to normalized 2028 earnings estimates.
Bank of America views Progressive as currently over-earning, while also identifying clear downside risks - including interest rate pressures, catastrophe volatility and shifts in competitive pricing - alongside upside drivers such as sustained growth, AI-accelerated market-share gains and a successful push into small-business insurance.
Analyst reactions to Progressive’s outlook have been mixed: Jefferies, KBW and BMO Capital have trimmed their price targets, while BofA Securities lifted its price target on the company after noting significantly better-than-expected net new policy additions in December. Goldman Sachs has reiterated a Buy rating.
Sector implications and Bank of America’s framing
Bank of America frames the ongoing industry shift as one where technology can both compress and reallocate value. AI and automation threaten commoditized portions of brokerage and distribution - the low-sophistication policies - while creating opportunities for brokers and underwriters that concentrate on complex risks and embed technology into their distribution and underwriting workflows.
The bank’s selections emphasize different ways to capture value in this environment: embedded, tech-enabled distribution and logical consolidation (Baldwin); specialist wholesale underwriting and human-led placement expertise (Ryan Specialty); and scale plus AI-driven efficiency and growth opportunities (Progressive).
What this means for investors and markets
Bank of America’s note offers investors a framework for assessing which insurance intermediaries may retain pricing power and competitive advantage as the sector evolves. The analysis couples company-level strategic assessments with valuation observations and recent deal activity, while also flagging the key external risks that could alter outcomes.
Investors should weigh the potential upside from AI-enabled segmentation and operational gains against the macro and industry-specific uncertainties Bank of America identifies.