AM Best said two major winter storms in the United States (Fern in January and Hernando in February) are expected to cause a significant drop in underwriting profits in the first quarter of 2026, but the impact will not be as severe as the California wildfires in 2025.
The ratings agency expects major insurers to absorb most of the losses from both events, while the impact on reinsurers will be smaller.
Winter Storm Hernando brought record snowfall and blizzards to the Northeastern United States, causing widespread power outages in Massachusetts, New Jersey, Delaware and Rhode Island.
A state of emergency was declared, businesses closed and thousands of flights canceled, and Newark Airport reported more than two feet of snow.
Hernando, coupled with projected $4-7 billion in insured losses from Winter Storm Fern, suggests first-quarter insured losses will be above average but less costly than the January 2025 California wildfires.
Fern affected southern states that were less prepared to withstand winter storms, while Hernando affected the northeastern United States, where colder weather was expected.
“Significant increases in commercial and residential values in Hernando-affected areas may have a modest impact on overall revenue,” analysts said.
states: “As the two storms are separate and distinct events, each of these events is likely to be contained within the primary underwriters; AM Best believes reinsurers will face a smaller impact.”
Winter storms primarily impact property/casualty insurance, such as homeowners insurance, commercial property insurance, and auto insurance. Business disruptions due to emergency closures and flight cancellations will increase the industry’s insured losses, the report said.
State Farm has the highest homeowner multi-risk market share in the Northeast, followed by auto lines. Progressive’s automotive line has the highest market share; Travelers has the highest market share in the commercial multi-risk business.
AM Best said: “Overall, total insured losses for insurers and reinsurers are expected to be manageable. As we noted in our recent Review and Preview report, despite headwinds, interest rate action and investment gains will drive U.S. property and casualty insurance industry results, and despite heavy losses in the first quarter caused by California wildfires and other weather events, 2025 property and casualty insurance industry results are expected to be the strongest in the past decade.”
The conclusion: “While the impact of catastrophe-related losses during the remainder of 2026 remains to be seen, AM Best views both storms as profitable events for affected carriers. More effective enterprise risk management practices play a significant role in the P&C industry’s resilience in 2025 and should serve the segment well in 2026.”