www.insurancemarketandnews.com
The U.S. property and casualty insurance industry delivered a sharp turnaround in the opening months of 2026, posting a substantial underwriting profit after weathering losses during the same period a year earlier.
According to a new AM Best analysis, insurers generated a net underwriting gain of $16.3 billion during the first quarter of 2026. The result marks a dramatic improvement from the first quarter of 2025, when the sector recorded an underwriting loss of approximately $1 billion amid heavy catastrophe-related claims, including those linked to California wildfires.
The industry’s recovery was fueled largely by a significant reduction in catastrophe losses. AM Best reported that catastrophe-related claims had a much smaller impact on insurer performance during the quarter, contributing 4.2 points to the industry’s combined ratio, compared with an estimated 14.5 points during the same period a year earlier.
With claims pressures easing, operating performance strengthened considerably. The industry’s combined ratio improved to 92.0 in the first three months of 2026, representing a seven-point improvement from the prior-year period. A combined ratio below 100 indicates that insurers are collecting more in premiums than they are paying out in claims and expenses, a key measure of underwriting profitability.
Investment performance also provided meaningful support. Net investment income increased by 10.3% year over year, adding momentum to the industry’s earnings growth. The combination of stronger underwriting results and higher investment returns pushed pre-tax operating income to $39.5 billion, nearly doubling from the level reported in the first quarter of 2025.
Overall profitability rose even further after accounting for investment gains. Net realized capital gains more than doubled during the quarter, helping drive net income to $41.8 billion. That figure represents an increase of 107.7% compared with the same period last year, highlighting the breadth of the industry’s financial recovery.
The findings are based on preliminary statutory financial filings submitted by insurers through June 1, 2026. AM Best said the data represents approximately 97% of the U.S. property-casualty market’s total net premiums written, providing a broad view of industry performance.
The results suggest that lower catastrophe-related losses, combined with stronger investment earnings, have significantly improved the financial position of U.S. property-casualty insurers. While weather-related events remain an ongoing risk for the sector, the first quarter of 2026 reflects a considerably more favorable operating environment than insurers experienced one year earlier.
Source: A.M. Best Company, Inc.
Track changing insurance market conditions, catastrophe trends, insurer performance, and developments influencing property and casualty coverage at Insurance Market and News.