The latest report released by Fitch Ratings shows that in 2025, the U.S. property/casualty insurance industry will achieve its strongest underwriting performance in two decades.
Last year, the industry achieved its second consecutive year of underwriting profitability, marking the second consecutive year of profitability after underwriting losses in 2023 and 2024.
“Adjusting for industry investment returns on large realized income items at Berkshire Hathaway Inc. (AA-/Stable), the industry’s second-largest insurer, statutory earnings rose 45% in 2025 to a record $136 billion. ROS grew to 11.5%, well above the 10-year average of 6.8%,” the report showed.
The industry’s combined ratio will improve by 3.7 percentage points to 93.0% by 2025, the report said, the best result since 2006.
The performance reflects the continued improvement of personal business and the overall stability of commercial business
Fitch highlighted the region’s performance, favorable reserve development and the absence of hurricanes making landfall in the United States throughout the year.
While profits reached new heights and capital levels remained at very strong levels, the report pointed to a slowdown in premium growth.
Directly written premiums (DWP) will grow by 5% by 2025, a sharp decline from annual growth rates of 10% per year in the previous four years.
Fitch expects premium growth to continue to slow, with net written premiums (NWP) and DWP expected to grow by 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, helped by record reserve releases and a quiet hurricane season,” said Tana Marcom of Fitch Ratings. “While Fitch expects margin compression in 2026, performance is expected to remain historically strong.”
Fitch said that as the market enters the softer phase of the cycle, the industry will continue to achieve industry underwriting profitability in 2026, albeit slightly lower than the previous year.
The ratings agency expects underwriting performance to deteriorate slightly this year, with a combined ratio of 96% to 97% expected, but still very strong compared with long-term averages.
Results are expected to reflect further moderation in pricing for personal and certain commercial product lines. It is expected that the long-tail liability sector will also face continued challenges as social inflation affects the severity and frequency of casualty losses.
Additionally, analysts predict that hurricane activity will return to more normal levels compared to the quieter season of 2025.
Fitch expects return on earnings (ROS) to be 9% in 2026, reflecting lower underwriting profits and investment income.
“Macro risks, including increased competition, resurgent inflation concerns, geopolitical uncertainty, slower economic growth and a challenging legal environment, could pose challenges to pricing discipline, reserve adequacy and investment performance,” analysts warned.