Positive Shift: U.S. P&C Insurance Underwriting Gains Q1 2026
The U.S. property and casualty insurance sector saw a remarkable improvement in underwriting results for Q1 2026, according to AM Best's financial review of U.S. P&C insurers. The industry achieved a net underwriting gain of $16.3 billion, a drastic turnaround from the $1.0 billion loss in the same quarter of the previous year.
This positive shift stemmed from a 9.3% reduction in incurred losses and loss adjustment expenses, coupled with a 3.9% rise in net earned premiums. Catastrophe-related losses notably decreased, following the January 2025 wildfires in California. Catastrophe losses contributed 4.2 points to the combined ratio in Q1 2026, down from 14.5 points in 2025, resulting in an improved combined ratio of 92.0 from 99.0. Excluding a $10.9 billion favorable reserve development, the accident-year combined ratio was 96.6.
Investment and Surplus Growth
Underwriting gains were reinforced by strong investment performance, nearly doubling pre-tax operating income. Net investment income increased by 10.3% to $22.9 billion, and pre-tax operating income rose 97.0% to $39.5 billion. Significant net realized capital gains, up 141.5% to $8.7 billion, supported a 107.7% boost in net income to $41.8 billion. The after-tax return on surplus improved to 3.3% from 1.8%.
Catastrophe losses in Q1 amounted to $10.0 billion on a net basis, significantly reduced from $33.3 billion in 2025, aligning with AM Best's catastrophe loss criteria. The policyholder surplus increased to $1.258 trillion by the end of Q1, a 2.2% rise from the previous year-end, reflecting $41.8 billion in net income and capital contributions, albeit offset by other financial activities.
Asset and Liability Trends
Total invested assets expanded to $2.719 trillion from $2.667 trillion at the end of 2025, with bonds as the largest segment at $1.509 trillion. Other key asset classes included $670.0 billion in preferred and common stock, and $300.6 billion in cash and short-term investments. Loss and LAE reserves grew to $1.021 trillion, up from $1.006 trillion in 2025.
The AM Best report covers companies representing approximately 97% of total industry net premiums written and policyholder surplus. The full report offers detailed insights, highlighting executive-level awareness gaps in risk management and evolving risk landscapes as highlighted by Aon. This evolving environment stresses the urgency of managing geopolitical, operational, and emerging risk complexities effectively.
Moreover, in workers' compensation insurance, integrating hospital and facility networks optimizes medical cost management. These network strategies ensure controlled pricing, enhanced care coordination, and predictable claim management—a necessity in the current healthcare ecosystem.