Two questions Reflation is still the dominant theme for Financials investors. This report addresses the two questions which arise most frequently: ''why didn''t Insurers participate in the rally?'' and ''Is it over?''. The reflation trade is dormant, not dead, and insurers are due an H2 catch-up, we conclude. The past In the first section of the report, we look at the lessons worth remembering from H1 if, as we expect, the reflation trade re-emerges in H2. Banks have so far followed the ''reflation playbook'', insurers have not. We explore the possible reasons why; none appears convincing or long-lasting. The present Given their diverging performance, Section two of the note compares the valuation set-up for both sectors. There''s a case for owning both, but the tactical appeal of banks over insurance is waning, and medium-term risk/reward now looks better for insurers. The future Section three of the note looks ahead, questioning whether ''capital return'' will be an H2 catalyst. For banks, we show that active income funds have re-built positions already and that yields are not superior to the insurers'', capping the re-rating potential. Near-term, bank dividends will likely surprise as provisions reach historic lows, but dividend futures markets may be the best way to play the theme, we suggest. For insurers, we see scope for rising extraordinary payouts, with some caveats. Investment Conclusions Within Insurance, valuation dispersion is high: our sub-sector preference is for Life (Top Picks LandG, NN, Phoenix) reinsurers retail PandC. Within banks: valuation dispersion is tighter, arguing for exposure to superior profitability and pre-provision growth at a reasonable price: Credit Agricole, Intesa, BBVA, Erste and Barclays.