Overview
The US P&C insurance industry recorded a $16.3 bn net underwriting gain in the first three months of 2026, up significantly from a $1 bn loss recorded in the prior-year period. A 3.9% increase in net earned premiums and a 9.3% decline in incurred losses and loss adjustment expenses (LAE) offset a $5 bn increase in dividends to policyholders.
Catastrophe losses were down significantly as the prior-year three-month period was impacted by the California wildfires in January 2025.
The industry’s combined ratio improved to 92. AM Best estimates that catastrophe losses accounted for 4.2 points on the three-month 2026 combined ratio, down from an estimated 14.5 points in the prior year.
Excluding $10.9 bn of favorable reserve development during the first three months of 2026, the industry’s accident year combined ratio was 96.6.
A 10.3% increase in net investment income earned combined with the underwriting gain drove pre-tax operating income up 97%, to $39.5 bn. A 141.5% boost in net realized capital gains also contributed to the industry’s net income, increasing 107.7% from the prior year to $41.8 bn (see TOP 100 Property & Casualty Insurance Companies in the U.S.).
Industry surplus increased 2.2% from the end of 2025 to $1.3 tn, as a combined $42.6 bn of net income and contributed capital was reduced by $15.5 bn of change in unrealized losses, other surplus losses, and stockholder dividends.
Private U.S. property and casualty insurance
Private U.S. property and casualty insurers posted a first quarter 2026 underwriting gain of $15.8 bn – quite the reversal after recording an underwriting loss of $864 mn for the first three months last year.
A new report from Verisk and the American Property Casualty Insurance Association (APCIA) said after tax net income for this portion of the industry more than doubled to $41 bn in Q1 2026.
Industry profitability improved in 2025 and the first quarter of 2026, driven largely by moderating inflation and an unusual respite from natural catastrophes over the past 12 months.
US P&C Insurance – Financial Indicators
| Financial Indicators | 3M2026 ($ mn) | YoY % Change |
|---|---|---|
| Net Premiums Written | 250.9 | 2.9% |
| Net Premiums Earned | 239.8 | 3.9% |
| Losses & LAE | 154.4 | -9.3% |
| Underwriting Expenses | 63.4 | 4.3% |
| Policyholder Dividends | 5.7 | 765.7% |
| Underwriting Income/(Loss) | 16.3 | NM |
| Net Investment Income | 22.9 | 10.3% |
| Pretax Operating Income/(Loss) | 39.5 | 97.0% |
| Realized Capital Gains/(Losses) | 8.7 | 141.5% |
| Federal Income Taxes | 6.4 | 81.8% |
| Net Income | 41.8 | 107.7% |
US P&C Insurance – Combined Ratio Components
| Combined Ratio Components | 3M2026 ($ mn) | YoY Change (Points) |
|---|---|---|
| Pure Loss Ratio | 55.6 | -9.1 |
| Loss Adjustment Expense (LAE) Ratio | 8.8 | -0.3 |
| Loss & LAE Ratio | 64.4 | -9.4 |
| Underwriting Expense Ratio | 25.3 | 0.3 |
| Policyholder Dividend Ratio | 2.4 | 2.1 |
| Combined Ratio (Reported) | 92.0 | -7.0 |
| Less: Accident Year Catastrophe Losses (Points)¹ | 4.2 | -10.3 |
| Less: A&E Losses (Points) | 0.1 | 0.0 |
| CORE Adverse/(Favorable) Development (Points) | -4.6 | -0.3 |
| Combined Ratio (Normalized) | 87.8 | 3.3 |
| Accident-Year Combined Ratio (Reported) | 96.6 | -6.7 |
| Accident-Year Combined Ratio (Normalized) | 92.4 | 3.6 |
Q1 2026 results reflected meaningful improvements, most notably in personal auto, but slower premium growth and continued pressure in casualty underscore an uneven recovery across the market.
Heading into the 2026 hurricane season, a critical focus for the industry is the potential for catastrophic activity to impact full-year performance. Profitability will need to hold through historically more active second and third quarters, as even in otherwise calm El Niño years, a single event can materially shift outcomes.
Insurers’ use of artificial intelligence and other granular data has improved how risks are selected, priced, and managed. Carriers are using more granular data and AI to improve insight into how specific risks are selected, priced and managed across their portfolios, bringing greater discipline to underwriting at scale.
Growth in net written premiums slowed to up 2.9% for Q1 compared with up 6.8% in Q1 2025. The first quarters of 2024, 2023, 2022 saw net premiums increase 9% to 10%.
US P&C Insurance Direct Premiums Written by Line of Business
| Rank | Line of Business | 3M 2026 ($ mn) |
|---|---|---|
| 1 | Other Private Passenger Auto Liability | 49,431.7 |
| 2 | Homeowners Multiple Peril | 42,474.6 |
| 3 | Private Passenger Auto Physical Damage | 39,479.4 |
| 4 | Other Liability – Occurrence | 23,671.7 |
| 5 | Other Commercial Auto Liability | 17,001.8 |
| 6 | Workers’ Compensation | 14,894.2 |
| 7 | Commercial Multiple Peril – Non-Liability | 11,439.9 |
| 8 | Other Liability – Claims Made | 9,564.7 |
| 9 | Inland Marine | 8,782.1 |
| 10 | Fire | 7,362.8 |
| 11 | Multiple Peril Crop | 6,972.4 |
| 12 | Allied Lines | 6,104.3 |
| 13 | Commercial Multiple Peril – Liability | 5,673.1 |
| 14 | Private Passenger Auto No Fault | 4,433.5 |
| 15 | Commercial Auto Physical Damage | 4,389.5 |
| 16 | Surety | 3,371.5 |
| 17 | Other Health | 2,303.9 |
| 18 | Farmowners Multiple Peril | 2,061.4 |
| 19 | Pet Insurance | 1,529.3 |
| 20 | Ocean Marine | 1,310.3 |
| 21 | Product Liability – Occurrence | 1,296.0 |
| 22 | Earthquake | 1,254.3 |
| 23 | Credit | 1,047.1 |
| 24 | Warranty | 1,045.2 |
| 25 | Medical Professional Liability – Occurrence | 974.0 |
| 26 | Mortgage Guaranty | 964.9 |
| 27 | Aggregate Write-Ins | 784.2 |
| 28 | Federal Flood | 780.8 |
| 29 | Boiler & Machinery | 629.1 |
| 30 | Aircraft (All Perils) | 602.9 |
| 31 | Commercial Auto No Fault | 526.6 |
| 32 | Excess Workers Compensation | 345.0 |
| 33 | Comprehensive Group | 332.5 |
| 34 | Fidelity | 316.5 |
| 35 | Private Flood | 267.7 |
| 36 | Product Liability – Claims Made | 235.7 |
| 37 | Medicare Supplement | 204.0 |
| 38 | Long-Term Care | 170.1 |
| 39 | Burglary & Theft | 152.1 |
| 40 | Private Crop | 143.6 |
| 41 | Disability | 86.3 |
| 42 | Credit Accident & Health | 52.5 |
| 43 | Financial Guaranty | 21.8 |
| 44 | International | 11.4 |
| 45 | Comprehensive Individual | 2.6 |
| 46 | Vision | 2.2 |
US P&C Insurance – Income Statement
| Income Statement | 3M2026 ($ mn) |
|---|---|
| Direct Premiums Written | 278.3 |
| Assumed Premiums Written | 227.7 |
| Ceded Premiums Written | 255.1 |
| Net Premiums Written | 250.9 |
| Change in Unearned Premiums | (11.1) |
| Premiums Earned | 239.8 |
| Losses Incurred | 133.3 |
| Loss Adjustment Expenses Incurred | 21.1 |
| Other Underwriting Expenses Incurred | 63.4 |
| Dividends to Policyholders | 5.7 |
| Net Underwriting Income | 16.3 |
| Net Investment Income Earned | 22.9 |
| Other Income | 0.2 |
| Pre-tax Operating Income | 39.5 |
| Pre-tax ROR (POI / NPE) | 16.5% |
| Net Realized Capital Gains | 8.7 |
| Federal and Foreign Income Taxes Incurred | 6.4 |
| Net Income | 41.8 |
FAQ
The industry reported a net underwriting gain of $16.3 bn in the first three months of 2026, compared with a $1 bn underwriting loss in the prior-year period. Private U.S. property and casualty insurers accounted for $15.8 billion of the total underwriting gain.
The improvement was primarily driven by a 3.9% increase in net premiums earned to $239.8 bn and a 9.3% decline in losses and loss adjustment expenses to $154.4 bn. These favorable trends more than offset a sharp increase in policyholder dividends.
Catastrophe losses declined substantially because the first quarter of 2025 was affected by the California wildfires. AM Best estimates that catastrophe losses contributed 4.2 points to the Q1 2026 combined ratio, compared with 14.5 points in the prior-year period.
The reported combined ratio improved by 7 points year over year to 92. The accident-year combined ratio was 96.6, excluding favorable reserve development. On a normalized basis, the combined ratio was 87.8, while the normalized accident-year combined ratio was 92.4.
Net investment income increased 10.3% year over year to $22.9 bn. Together with the underwriting gain, this lifted pre-tax operating income by 97% to $39.5 bn.
Net income rose 107.7% year over year to $41.8 bn. The result was supported by the improvement in underwriting profitability, higher investment income, and an 141.5% increase in realized capital gains to $8.7 bn.
Industry surplus increased 2.2% from year-end 2025 to approximately $1.3 tn. Net income and contributed capital added a combined $42.6 bn, partly offset by unrealized losses, other surplus losses, and stockholder dividends.
