US Property and Casualty Insurers Post Their Best First-Quarter Underwriting Result in 25 Years, With an 89.5 Combined Ratio

The US property and casualty insurance industry started 2026 with its best underwriting result for a first quarter in at least a quarter of a century, according to S&P Global Market Intelligence. The analysis, based on company filings with the National Association of Insurance Commissioners as of May 19 and reported by Insurance Journal on May 22, shows an industry that was highly profitable in the first three months of the year, helped by a quiet period for catastrophes. It also shows where the pressure is building. The figures here are the industry aggregates from that report and are not forecasts.

The combined ratio is the key measure. It adds claims and expenses and divides by premiums, so a figure below 100 means an underwriting profit. The industry's combined ratio in the first quarter was 89.5 before policyholder dividends, the best first-quarter result in at least 25 years. Including policyholder dividends, which are payments made back to customers by some mutual insurers, it was 91.9, the best comparable result since 2006. The underwriting gain was about $22.1 billion, more than double the $10.2 billion of the first quarter of 2024 and above the inflation-adjusted $14.2 billion of the first quarter of 2006. S&P notes that the industry dividend ratio was nearly 2.4 points, the second highest in 25 years. State Farm's dividend of roughly $5 billion was recorded in the first quarter, while USAA's of roughly $4 billion was tied to 2025 results. For the full year 2025, the combined ratio was just under 93, the best in nearly two decades, with only 2006 at 92.4 better.

What drove the result? Mainly homeowners and private auto insurance. The homeowners multiperil loss ratio, meaning claims as a share of premiums, fell to 44.3 in the first quarter of 2026, from 102.3 in the first quarter of 2025, when the Los Angeles wildfires produced catastrophic losses. Other property lines, such as fire and the property part of commercial multiperil, also improved significantly. In private passenger auto, the largest personal line, the direct incurred loss ratio was 60.4. That was only 0.6 points lower than in the first quarter of 2025, but 15.4 points lower than in the first quarter of 2023, when the industry was struggling with rapid claims inflation. Seven of the biggest personal auto insurers, Progressive, Allstate, GEICO, State Farm, USAA, Farmers Group and Liberty Mutual, each posted an underwriting gain of more than $1 billion. State Farm's underwriting gain of nearly $2 billion contrasted with a loss of more than $5.0 billion in the first quarter of 2025, a swing of more than $7 billion.

The headline should not be read as a permanent change. A large part of the improvement compared with 2025 is the absence of a major catastrophe in the quarter. The wildfires that hit Los Angeles in early 2025 raised the base comparison, and a quieter period in 2026 lowered the loss ratio. Insurers' results swing with the weather, which is why a single strong quarter is a limited guide to the year.

S&P also flagged headwinds beneath the surface. Competition is mounting in private auto, which means insurers are fighting harder for customers, a development that tends to slow premium rises and can reduce margins. Commercial property rates are falling sharply, as capacity returns to the market. And casualty lines remain under pressure. The other liability loss ratio was 65.8, the highest first-quarter result in 24 years, and the direct incurred loss ratio for commercial auto liability was 71.1, up 3.2 points from the first quarter of 2025. These lines, which include general liability, umbrella and commercial auto, are exposed to what the industry calls social inflation, the rise in claims costs from larger jury awards, litigation funding and legal system practices. The reports reviewed here do not give a forecast for the full year.

How does this relate to more recent news? Travelers' third-quarter results, which we cover separately, show the same pattern in a later period: a strong underwriting margin with moderate catastrophe losses. Taken together, the data show an industry that is currently profitable but whose margins depend on weather and on how casualty claims develop.

What does it mean for customers? Strong industry profits do not guarantee lower premiums, since prices reflect expected future costs, local conditions and each insurer's own results. They do suggest that insurers have room to compete, so shopping around may yield better offers in competitive lines such as private auto. In homeowners insurance, a quiet quarter does not remove the long-term pressure from severe weather and rebuilding costs. For businesses, falling commercial property rates may help renewals, while liability pricing could stay firm.

For investors and regulators, the main questions are how long the benign conditions last and whether competition erodes margins before casualty claims catch up. Rate adequacy, reserve strength and reinsurance costs will matter. This article reports on published industry statistics and is not a recommendation to buy or sell any security.

The second-quarter figures, which S&P will publish in the late summer, will show whether the first quarter was an exception or the start of a longer run of strong results.