Aon says global property and casualty insurers are entering the next phase of the market cycle with stronger earnings and capital positions. Its latest analysis argues that recent profitability gives carriers more room to invest in underwriting, technology and portfolio decisions as market conditions become less uniform.
The report focused on how insurers use capital to support growth. Aon reviewed 120 global P&C insurers in its third annual study of the group.
Return on average equity reached 16.8% in 2025, the highest level Aon has recorded since tracking the cohort began in 2009. RoAE improved for a fifth consecutive year following the 2020 downturn, supported by stronger underwriting income, favorable market conditions and a relatively mild catastrophe year.
The earnings picture became less consistent across individual carriers. The share of insurers reporting year-over-year RoAE improvement fell to 60% from 74%, showing wider differences in performance despite the stronger aggregate result.
Premium growth also slowed again. The 120 insurers recorded 5.2% growth in 2025, marking a fourth consecutive annual slowdown and leaving the rate below its 10-year average.
Growth was also less than half the level recorded in 2021. That deceleration puts more pressure on insurers to generate earnings through underwriting discipline and portfolio selection rather than relying on broad premium expansion.
The combined operating ratio improved to 91.1%, its lowest level of the decade. At the same time, differences between stronger and weaker performers widened across the sector.
“The hard market restored profitability for many insurers, but long-term performance will increasingly depend on differentiation,” said Paul Campbell, Global Growth Officer, Strategy and Technology Group at Aon.
Campbell said slower growth is widening the gap between companies expanding profitably and those struggling to maintain both objectives. He expects stronger performers to use current earnings to make more selective decisions about growth, capital deployment and future operating capabilities.
Aon’s analysis identifies several mistakes insurers should avoid as they pursue profitable growth. The firm warns against treating recent returns as permanent, delaying difficult portfolio decisions or viewing capital only as a balance-sheet buffer.
It also argues against postponing investment in people or technology. AI spending forms another part of the discussion, with Aon urging insurers to build their own capabilities rather than allow competitors to gain an operating advantage first.
Higher profitability gives carriers more financial flexibility than they had earlier in the cycle. Insurers now have greater capacity to invest in underwriting systems, portfolio analytics, reinsurance structures and digital operations.
Talent spending also becomes easier when earnings remain strong. Aon argues that management teams should separate structural earnings improvement from profits tied mainly to favorable pricing or catastrophe experience.
That distinction matters as rate momentum weakens across parts of the market. Insurers relying too heavily on broad rate increases or market-wide premium growth face a harder path if pricing continues to soften.
Aon also sees greater separation between different parts of the insurance market. Property casualty insurance and reinsurance are beginning to move along different paths, while globally diversified and specialist carriers continue to deliver stronger relative results.
The shift makes broad participation across every available segment less attractive. Aon expects insurers to place more weight on portfolio mix, capital allocation and risk appetite when deciding where to expand.
Operating-model investment and acquisitions also enter those decisions. Stronger earnings give insurers more room to pursue targeted transactions or build internal capabilities where returns justify the spending.
“Market cycles create opportunities, but they do not create lasting advantage on their own,” Campbell said. He added that insurers using current earnings to improve capital allocation and operating capabilities should enter the next growth phase in a stronger competitive position.
Aon’s figures show a sector with record aggregate returns but slower top-line expansion. The next stage looks less dependent on broad market momentum and more dependent on where individual carriers put capital, which risks they select and how efficiently they run their businesses.
