California Wildfires Drive $1.1B Underwriting Loss for US Property/Casualty Q1 2025

The U.S. property/casualty (P/C) insurance sector faced a significant underwriting loss of $1.1 billion in the first quarter of 2025, a reversal from the $9.4 billion gain recorded in the same period in 2024. This downturn is primarily attributed to the California wildfires in January 2025, which led to substantial catastrophe-related losses. These losses caused the combined ratio for the industry to worsen to 99.4 from 94.4 year-over-year, with catastrophe events contributing 14.7 percentage points to this ratio compared to 5.4 points in the previous year. Despite a modest 2.4% increase in net investment income, the industry's pre-tax operating income fell sharply by 34.4% to $19.6 billion. A further factor impacting net income was a 74.6% decline in net realized capital gains, largely due to a $10.5 billion drop at National Indemnity Company. Consequently, net income for the sector decreased by 50.4% from the prior year, settling at $19.8 billion. The data, reflecting approximately 96% of total net premiums written, is derived from companies' statutory filings as of May 29, 2025. This financial snapshot underlines the increasing influence of natural disasters on underwriting results within the P/C insurance industry and highlights the variable impacts on earnings beyond underwriting performance, particularly from investment-related sources.