A recent report from AM Best showed that the U.S. property and casualty (P&C) insurance industry recorded net underwriting gains of $16.3 billion in the first quarter of 2026, after losing $1 billion in the same period a year earlier.
Net premiums increased 3.9% and losses incurred and loss adjustment expenses (LAE) fell 9.3%, offsetting a $5 billion increase in dividends to policyholders.
The ratings agency highlighted a sharp decline in catastrophe losses as the previous year was impacted by the costly California wildfires in January 2025.
AM Best pointed out that catastrophe losses accounted for 4.2 percentage points of the combined ratio in the first quarter of 2026, down from the 14.5 percentage points estimated in the same period last year. This resulted in a combined ratio of 92% in 1Q26, an increase of 7 percentage points from the same period last year.
Excluding the $10.9 billion in favorable reserve development in the first three months of 2026, the industry’s combined accident annual ratio was 96.6%.
Net investment income increased 10.3%, and combined with underwriting gains, pretax operating income increased 97% to $39.5 billion. In addition, the substantial increase of 141.5% in net realized capital gains also contributed to the industry’s net profit growth of 107.7% year-on-year to US$41.8 billion.
Industry earnings increased 2.2% from the end of 2025 to $1.3 trillion, with net income and paid-in capital totaling $47.6 billion partially offset by $15.5 billion in unrealized losses, other earnings losses and shareholder dividends.
