In a stunning turnaround for the sector, the US P&C insurance industry posted a massive underwriting rebound in the first nine months of 2025, with net underwriting gains soaring to approximately $35 billion and pretax operating income jumping nearly 52% amid lower catastrophe losses and steady premium growth. This AM Best report highlights one of the strongest performances in years for property casualty insurers, signaling robust health in a key segment of the American financial landscape.
The numbers tell an impressive story. According to AM Best’s latest special report on nine-month 2025 results, the industry recorded a net underwriting gain of around $35 billion— a dramatic leap from just $3.7 billion in the same period of 2024. This surge was fueled by a 7% increase in net earned premiums, while incurred losses and loss adjustment expenses stayed virtually flat year-over-year.
A quieter third quarter for natural disasters played a pivotal role. Catastrophe losses added only about 8.0 percentage points to the combined ratio through September 2025, down from 8.7 points the prior year. That restraint helped drive the industry’s combined ratio down four full points to an enviable 94.0—indicating solid profitability, as anything below 100 signals underwriting gains.
Adding fuel to the fire, net investment income rose 5.9%, contributing to a 51.9% spike in pretax operating income, reaching $102.4 billion. Even after accounting for $18 billion in favorable prior-year reserve releases, the accident-year combined ratio came in at 96.5, showing underlying strength beyond one-time boosts.
AM Best analysts attribute much of this rebound to disciplined pricing and risk selection following tougher years marked by inflation-driven claims and frequent severe weather. Personal lines, including auto and homeowners, continued to lead the recovery with improved margins, while commercial segments benefited from hardening rates in prior cycles.
Industry experts are buzzing with optimism. “This is among the best underwriting performances we’ve seen in over a decade,” noted one senior analyst in commentary accompanying the report. Reactions poured in from across the sector, with executives praising the muted cat activity and premium momentum. On financial forums and X, stakeholders hailed the results as validation of strategic rate adjustments implemented over the past couple of years.
For everyday Americans, these strong figures translate to real-world stability. A healthier P&C industry means more resilient coverage for homes, vehicles, and businesses—critical in an era of rising severe weather events linked to climate shifts. Lower combined ratios could ease pressure on premium hikes, potentially stabilizing auto and property insurance costs that have burdened household budgets in recent years. Economically, the sector’s profitability supports thousands of jobs in underwriting, claims, and agency roles nationwide, while bolstering investment returns that flow into broader markets.
That said, challenges linger. An 80% drop in net realized capital gains—largely from shifts at major players like Berkshire Hathaway affiliates—pulled overall net income down 23% to $100.9 billion. Ongoing risks from secondary perils, such as convective storms, and potential litigation trends remind insurers to stay vigilant.
Zooming out, the data underscores the P&C sector’s adaptability. Premium growth has moderated from double-digit paces in prior years, yet efficiency gains and lower volatility are delivering outsized profits. Fitch Ratings recently projected a full-year 2025 combined ratio around 94—the best in over 15 years—aligning closely with AM Best’s nine-month snapshot.
As the industry heads into the final quarter, all eyes are on winter weather patterns and any late-season events. But with surplus capital at record levels—up significantly in recent years—carriers appear well-positioned to absorb shocks.
This underwriting rebound not only pads insurer balance sheets but reinforces the vital role of property casualty insurance in safeguarding American assets and livelihoods. The momentum from these nine-month results sets a positive tone for 2026, where analysts anticipate continued, if slightly tempered, profitability amid evolving risks.
By Sam Michael
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