Best’s Market Segment Report: U.S. Property/Casualty Sector Notches Strongest Performance in a Decade

The U.S. property/casualty insurance industry achieved its strongest performance in ten years during 2025, driven by significant improvements in underwriting and pricing strategies. According to a new AM Best report, the sector generated $84 billion in underwriting gains over the last two years, marking a dramatic reversal from the $51 billion in losses recorded between 2021 and 2023. This recovery is particularly significant for the property sector as it demonstrates resilience against major catastrophe losses, such as the 2025 Los Angeles wildfires, while benefiting from sustained rate momentum in personal and commercial lines.

The AM Best report, titled “2025 P/C Snapshot: Strongest Performance in a Decade Showcases Resilience,” highlights a major financial turnaround for the U.S. property/casualty industry. After three years of underwriting losses totaling $51 billion from 2021 through 2023, the industry pivoted to a $45 billion gain in 2024, followed by continued profitability in 2025. This success came despite significant early-year headwinds from the Los Angeles wildfires. The personal lines segment was a primary driver of this growth, with underwriting profits nearly quadrupling to exceed $45 billion in 2025, while the commercial lines segment saw its profits more than double to over $19 billion.

Technological advancements and data analytics have played a crucial role in this recovery, particularly for insurers managing personal auto and homeowners’ lines. David Blades, associate director at AM Best, noted that these tools have enhanced underwriting, claims handling, and ratemaking processes. Furthermore, the industry benefited from substantial rate momentum established in 2024, which flowed through to net earned premiums in 2025. This pricing adequacy allowed private passenger auto insurers to bring their combined ratios back below 100 after three years of unprofitable underwriting, reflecting a more disciplined approach to the market.

While the aggregate results for commercial lines remain favorable, the report identifies ongoing challenges within specific casualty segments that could impact the broader property/casualty landscape. Christopher Graham, senior industry analyst at AM Best, pointed out that commercial auto liability and other liability occurrence lines continue to face pressure from adverse development and elevated claims severity. Despite these specific pressures, the broader commercial segment has maintained consistent underwriting profits over a five-year period, supported by improved investment returns and generally adequate reserves. These findings are based on NAIC Insurance Expenses Exhibit financial statements processed by AM Best as of June 2, 2026.