US property and casualty insurance entered 2026 with momentum fading after an unusually strong 2025, which marked a cyclical high for underwriting results, according to a new report from Swiss Re Institute. Premium growth and profitability remain healthy, though the slope looks flatter.
The institute estimates industry return on equity reached 15% in 2025, driven by strong underwriting and still-supportive investment income.
The combined ratio fell to 89% in Q3 2025, the lowest quarterly level recorded since at least 2001.
According to Beinsure analysts, results like this rarely persist without pullback.
Underwriting strength reflected steady core performance, favourable reserve development, and catastrophe losses broadly consistent with long-term averages.
Weather also played a role. No hurricane made US landfall for the first time in ten years, even as three Category 5 storms formed in the Atlantic.
Margins remain attractive heading into 2026, Swiss Re said, which is already drawing incremental capacity into the market. More capital, less scarcity. Pricing momentum has started to ease.
As competition builds, the firm expects growth and returns to drift closer to the cost of capital through 2026 and 2027.
Forecasts point to ROE of 12% in 2026 and 10% in 2027, reflecting weaker underwriting performance as rate increases fade and claims inflation continues to pressure results.
Investment income still helps, though less than before. The gap between portfolio yields and new-money yields has narrowed, limiting upside. Together, underwriting pressure and softer investment tailwinds push total returns toward normal levels by 2027.
Swiss Re expects nominal premium growth to trough around 3% in 2026 before edging up to roughly 3.5% in 2027 as the cycle rebalances.
Growth already slowed to about 5% in the first nine months of 2025, following four years near 10% annual expansion between 2021 and 2024.
Most personal and commercial lines are converging toward low- to mid-single-digit growth.
Personal auto sits at the centre of the outlook. Strong profitability in 2025 is feeding through to rate reductions, which could weigh on industry-wide growth next year.
Property pricing also continues to ease, though rising demand linked to data centre construction offers partial offset.
The report forecasts a 97% combined ratio for 2026 and 99% for 2027, compared with an estimated 94% for 2025.
Swiss Re expects underwriting results to deteriorate from a high base as retained earnings boost insurers’ appetite to deploy capital and intensify rate competition. How quickly pricing erodes, and across how many lines, will shape growth and profitability through the next phase of the cycle.
