U.S. Property and Casualty Insurers Report Strong Q1 2026 Performance
In the first quarter of 2026, U.S. property and casualty insurers issued $6.2 billion in policyholder returns, spurred by enhanced underwriting performance. Reports from Verisk and the American Property Casualty Insurance Association (APCIA) highlight a net underwriting gain of $15.8 billion—a significant improvement from the $864 million underwriting loss in the same quarter of 2025. The combined ratio improved markedly to 92.4% from last year's 99.2%.
A reduction in incurred losses and loss adjustment expenses, observing a 9.6% decrease year over year, has been instrumental in improving financial results. The first quarter of 2025 was marred by the Palisades and Eaton wildfires, which drove substantial catastrophe losses. However, premium growth moderated; net written premiums climbed only 2.9% in early 2026, down from 6.8% in 2025 and 9.6% in 2024. Net earned premiums rose by 3.8%, compared to the previous year's increase of 7.8%.
Robert Gordon, APCIA Senior Vice President, commented on how premium growth effectively declined in 2026, factoring in inflation and policyholder dividends. This reflects a return benefit to policyholders following years of premium hikes. The larger recovery trend, which began in 2025, saw U.S. P&C insurers achieving an estimated $63 billion net underwriting gain for the year, up from a $23 billion gain in 2024, and a $22 billion loss in 2023, alongside an improved annual combined ratio of 92.9% from 96.6% in 2024.
Industry profitability also showed a positive trajectory. Net income after taxes surged to $40.9 billion from $19.4 billion a year earlier. Policyholders’ surplus increased to $1.24 trillion from $1.09 trillion, while realized capital gains escalated to $8.8 billion from $3.7 billion.
Despite robust financials, challenges persist. Gordon pointed out that legal system abuse and heightened claims severity continue to weigh on the industry. The APCIA noted that the median nuclear jury award in U.S. liability cases climbed to approximately $44 million in 2023, nearly double from 2020. Additionally, global capital in third-party litigation funding was around $13 billion, potentially surpassing $50 billion by the mid-2030s.
Inequality in recovery remains evident across business lines. Saurabh Khemka, President of Verisk Underwriting Solutions, noted improvements in personal auto lines, while casualty lines continue to face challenges.
Looking ahead, preparations for the 2026 hurricane season are in progress. NOAA predicts a 55% chance of below-normal Atlantic hurricane activity, forecasting eight to 14 named storms. Insurers are implementing wind and named-storm deductibles for high-risk coastal areas. Swiss Re projects a 10% probability of a peak-loss year potentially reaching $320 billion.