In 2025, the US property/casualty insurance industry delivered its strongest underwriting performance in two decades, according to a newly released report by Fitch Ratings.
Last year, the sector achieved its second consecutive year of underwriting profitability, marking its second consecutive year of profitability after the underwriting losses seen in 2023 and 2024.
“After adjusting industry investment earnings for large realized gain items at Berkshire Hathaway Inc. (AA-/Stable), the industry’s second-largest insurer, statutory earnings increased by 45% in 2025 to a record $136 billion. ROS increased to a high 11.5%, well above the 10-year average of 6.8%,”the report revealed.
The industry’s combined ratio improved 3.7 percentage points (pp) to 93.0% in 2025, its best result since 2006, according to the report.
Results reflected continued improvement in personal lines, generally stable commercial line
performance, favourable reserve development and the lack of hurricane landfall in the US throughout the year, Fitch highlighted.
While earnings reached new heights and capital levels remained at very strong levels, the report noted a deceleration in premium growth.
Direct written premiums (DWP) increased by 5% in 2025, a significant drop from the 10% annual growth recorded in each of the prior four years.
Fitch projects continued deceleration in premium growth, with net written premiums (NWP) and DWP expected to increase only 3% to 4% in 2026 as rates continue to soften and economic uncertainty impacts growth in certain commercial lines.
“The property/casualty industry reported its highest underwriting profitability in 20 years aided by record reserve releases and a quiet hurricane season. While Fitch expects margin compression in 2026, results are expected to remain historically strong,” Tana Marcom, Fitch Ratings, stated.
According to Fitch, the industry will experience continued industry underwriting profitability in 2026, though slightly down from the prior year, as the market enters a softer part of the cycle.
The rating agency anticipates a modest deterioration in underwriting performance for the year, with a projected combined ratio of 96% to 97%, still indicating a very strong performance compared to the long-term average.
Results are expected to reflect further pricing moderation in both personal and certain commercial lines. Continued challenges in longer-tail liability segments are also expected, as social inflation affects the severity and frequency of casualty losses.
Moreover, analysts forecast a return to a more normalised level of hurricane activity, compared to the quiet 2025 season.
Fitch predicts return on surplus (ROS) to stand at 9% in 2026 reflecting lower underwriting profits and investment earnings.
“Macro risks, including increasing competition, renewed inflation concerns, geopolitical uncertainty, slowing economic growth and a challenging legal environment, could pose challenges for pricing discipline, reserve adequacy and investment results,” analysts warned.
