Fitch Ratings’ review of the 2025 GAAP financial results of 41 North American property and casualty reinsurers found that operating returns remained at favorable levels, supported by strong underwriting performance and investment income growth.
The overall operating return on the group’s common shares will be 10.9% in 2025, down from 11.1% in 2024, with almost all sectors still achieving double-digit returns. Disaster-related volatility subsided in the second half of 2025, driving particularly strong returns for Florida homeowner experts and individual columnists.
Despite the devastating California wildfires in January 2025, overall disaster losses fell 8%. As a result, the group’s combined ratio will increase by 4.5 percentage points in 2025, improving from 5.2% in 2024.
Although the reinsurer group absorbed the highest proportion of catastrophe losses, its underwriting performance improved thanks to a favorable pricing environment, with a combined ratio of 93.0% in 2025, down from 93.9% in 2024.
The group’s common shareholders’ equity increased by 13% in 2025, reflecting positive net profits and a narrowing of its unrealized bond gain (loss) position. Capital returned to investors increased by 19.5%, slowing growth. Return on capital rose even though Berkshire Hathaway (BRK) did not conduct $2.9 million in share repurchases last year. Excluding BRK, the group’s return on capital increased by 31.2% in 2025.
The release of reserves in 2025 increased the combined ratio by 2.3 percentage points, higher than the 1.3 percentage points in the previous year, reflecting the continued good development in the previous year.
Social inflation continues to drive loss cost trends, particularly in commercial auto, general liability and excess casualty lines, causing multiple reinsurers/insurers to report modest reserve charges in 2025. However, the release of large workers’ compensation reserves largely offset this negative development.
In 2025, core fixed income portfolio returns will remain strong, with higher yields and larger investment asset balances, driving investment income to $74 billion, up 9% year-on-year. The annualized total investment yield has stabilized at 3.9%, stabilizing after rising sharply in the previous two years under a favorable interest rate environment.
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