U.S. Property & Casualty Insurance Sees Strong Underwriting Gains in Early 2025

The U.S. property and casualty (P&C) insurance sector experienced a significant improvement in underwriting profitability during the first nine months of 2025, according to the latest analysis by AM Best. The industry reported a net underwriting gain of $35 billion, a substantial increase from the $4 billion gain recorded in the same period in 2024. This turnaround is attributed to premium growth, stable loss ratios, and subdued catastrophe losses in Q3 2025. The data, covering 98% of the industry's net premiums written, highlights a 7% rise in net premiums written and essentially flat loss and loss adjustment expenses year over year. The combined ratio improved by four points to 94.0, with catastrophe losses dropping to 8.0 points from 8.7 points in 2024, reflecting disciplined risk management and pricing adjustments amid the ongoing market conditions. Alongside underwriting performance, investment income rose by 5.9%, contributing to a 52% increase in pretax operating income which reached $102.4 billion. However, the industry saw a 23% decline in net income, down to $100.9 billion, primarily due to an 80% drop in net realized capital gains, including a notable $60.5 billion decrease at three Berkshire Hathaway entities. This divergence between operating results and net income underscores the impact of investment portfolio volatility on overall profitability. AM Best's Special Report provides a comprehensive review of these financial results and serves as a key resource for stakeholders monitoring market performance and regulatory environment developments. The improved underwriting metrics coupled with elevated investment returns suggest a cautiously optimistic outlook for the U.S. P&C insurance market heading into 2026, even as market participants remain vigilant over capital market uncertainties and loss trends.