US Property and Casualty Insurers Posted a $22.1 Billion First-Quarter Underwriting Gain and an 89.5% Combined Ratio, S&P Data Show, With Other Liability and Commercial Auto Still Weak

The US property and casualty insurance industry started 2026 with the best first-quarter underwriting result that data providers can find in at least 25 years. According to figures from S&P Global Market Intelligence reported by Risk & Insurance on May 27, 2026, the industry recorded what the article called an unprecedented net underwriting gain of $22.10 billion in the first quarter. The combined ratio before policyholder dividends was 89.5%, more than a full point better than any first-quarter result in at least 25 years. It was also the seventh straight quarter with a combined ratio below 100%, which matches a run that lasted from the third quarter of 2014 to the first quarter of 2016. These figures describe the first quarter only; later quarters have been reported since, and readers should check for the latest data.

What the combined ratio means

The combined ratio is the total of claims and expenses expressed as a percentage of premiums earned. A ratio of 89.5% means that for every $100 of premium earned, the industry spent about $89.50 on claims and expenses, leaving an underwriting profit of about $10.50 before investment income. That figure is arithmetic on the reported ratio and excludes the effect of policyholder dividends. The report notes that the policyholder dividend ratio rose to nearly 2.4% in the quarter, the second highest quarterly level in 25 years, largely because of State Farm's $4.95 billion one-time auto dividend. Dividends affect the combined ratio but not the net underwriting gain, which is why the two measures can appear to tell slightly different stories.

Why homeowners swung

The biggest driver was homeowners multiperil insurance, where the direct incurred loss ratio, meaning claims relative to premiums, fell 58.1 points to 44.3% from 102.3% a year earlier. The earlier figure had been inflated by the Los Angeles wildfires in the first quarter of 2025. In other words, a large part of the improvement is a comparison with an unusually bad quarter, as well as a benign first quarter in 2026. Fire and commercial multiperil, excluding liability, also improved, with loss ratios falling 40.3 and 11.2 points respectively. The report adds that carriers have largely held pricing discipline in homeowners despite modest catastrophe losses, which means premium rates have not fallen sharply even though claims have eased.

Auto insurance

Private auto, the largest personal line, had a loss ratio of 60.4%, down 0.6 points from the previous year and about 15.4 points below early 2023, when loss-cost inflation was pushing claims up. The report says that Progressive, Allstate, Berkshire Hathaway, the parent of Geico, State Farm, USAA, Farmers Group and Liberty Mutual each posted underwriting profits above $1 billion. State Farm swung to a gain of $1.98 billion from a loss of $5.09 billion a year earlier. A note of caution in the report is that competition is slowing private auto premium growth, which could affect the pace of future gains.

The weak spots

Not every line improved. Other liability, a broad category that includes general liability, had a loss ratio of 65.8%, the highest first-quarter result in 24 years. Commercial auto liability worsened by 3.2 points to a 71.1% loss ratio. These are the long-tail casualty lines where claims can take years to resolve and where litigation costs and social inflation, a term for rising claim costs driven by larger jury awards and legal practices, have been a persistent problem. The report lists persistent social inflation in long-tail liability among the risks to the outlook.

Risks S&P identified

S&P flagged several risks: competition slowing private auto premium growth, falling commercial property rates, doubts about favourable workers' compensation reserve development, geopolitical loss-cost inflation and social inflation in liability. The report says that carriers could extend the run of sub-100% quarters later in 2026 if catastrophe activity stays benign, which depends on weather that cannot be forecast with confidence.

Different totals from different sources

Readers who compare industry tallies will find different numbers. Trade press reports the same quarter with different totals, for example a headline on an AM Best special report citing a $16.3 billion first-quarter underwriting gain and another report citing a 92.4% combined ratio. The differences arise from the data sets, the treatment of items such as policyholder dividends and the group of companies included, and this article has not attempted to reconcile them. The S&P figures in this article are those cited in the Risk & Insurance report.

A caveat on the source

The Risk & Insurance page contains one sentence saying that private auto made up more than one-third of total direct premiums written in the third quarter, which seems inconsistent with a first-quarter report and may be an error. This article does not rely on that statement.

What it means

For policyholders, a record underwriting quarter does not automatically mean lower prices, as insurers noted they have kept pricing discipline in homeowners. For businesses, the weakness in liability lines suggests that casualty coverage remains more expensive and harder to place than property. For investors, a long run of profitable quarters tends to invite competition, which the report already identifies in private auto and commercial property.

This article summarises a trade-press report of third-party data. It is general information and not investment advice.