The US property and casualty (P&C) insurance sector recorded a $16.3 billion net underwriting gain in the first quarter of 2026, following a $1 billion loss in the same period a year prior, according to a recent report by AM Best.
A 3.9% increase in net earned premiums and a 9.3% decline in incurred losses and loss adjustment expenses (LAE) offset a $5 billion increase in dividends to policyholders.
The ratings agency highlighted that catastrophe losses were down significantly, as the prior year period was impacted by the extremely costly California wildfires in January 2025.
AM Best noted that catastrophe losses accounted for 4.2 points on the first quarter 2026 combined ratio, down from an estimated 14.5 percentage points a year earlier. This led to a combined ratio of 92% in Q1’26, a seven-point improvement over the prior year period.
Excluding $10.9 billion of favourable reserve development during the first three months of 2026, the industry’s accident year combined ratio was 96.6%.
A 10.3% increase in net investment income earned, combined with the underwriting gain, drove pre-tax operating income up 97% to $39.5 billion. Further, a significant 141.5% increase in net realised capital gains also contributed to industry net income, which rose 107.7% year on year to $41.8 billion.
Industry surplus increased 2.2% from the end of 2025 to $1.3 trillion, as a combined $47.6 billion of net income and contributed capital was partially offset by $15.5 billion of unrealised losses, other surplus losses, and stockholder dividends.
