In 2025, the U.S. property and casualty industry recorded its largest underwriting profit and lowest combined ratio in a decade, driven by improved underwriting performance and pricing, according to a recent AM Best report.
The ratings agency noted that the sector generated $84 billion in underwriting gains over the past two full calendar years, following $51 billion in underwriting losses between 2021 and 2023.
The turnaround in net underwriting performance began in 2024 with a $45 billion gain and continued in 2025, despite considerable losses at the beginning of the year from the Los Angeles wildfires in January.
According to the report, the U.S. personal lines segment’s underwriting profit almost quadrupled to $45.7 billion in 2025 and comprised 51% of total industry direct premiums written, while the commercial lines segment’s profit more than doubled to $19.2 billion.
Private passenger auto insurers have experienced a notable turnaround over the past two years, with the combined ratio falling well below 100 in both 2024 and 2025 after exceeding that threshold in the previous three years, reflecting unprofitable underwriting performance.
David Blades, associate director at AM Best, said, “Insurers underwriting both personal auto and homeowners’ lines of coverage have reaped the benefits of technology and data analytics to supplement underwriting, claims handling and ratemaking.
“For both lines, there was significant rate momentum coming into 2024 that flowed through net earned premium in both that year and 2025, aiding bottom-line results.”
AM Best noted that U.S. commercial lines insurers in aggregate have generated underwriting profits consistently over the five-year period covered in the report. The analysis is based on companies whose NAIC Insurance Expenses Exhibit financial statements were received, processed, and aggregated by AM Best as of 2nd June 2026.
The commercial lines results reflect strong underwriting and operating performance, sustained pricing adequacy, improved investment returns, and generally adequate reserves.
“Casualty lines, specifically commercial auto liability and other liability (occurrence) lines remain pressured by adverse development and elevated claims severity,” said Christopher Graham, senior industry analyst, AM Best. “Calendar-year underwriting performance varies widely across major commercial lines of business, but aggregate results remain favourable.”
AM Best added that workers’ compensation continues to positively contribute to aggregate commercial lines results; however, underwriting margins for the line have continued to shrink as the recent trend of declining rates persists.
The report also highlighted that claims trends remain a central concern for commercial liability lines, driven by social inflation, aggressive litigation tactics, third-party litigation funding, increasing settlement costs, and rising jury awards.
In addition, adverse reserve development continues to plague commercial auto liability, with another $2.0 billion in reserve deficiencies in 2025, mostly on the reserves of the recent accident years, 2023 and 2024.
