US P&C Insurers Post Best First-Quarter Underwriting Result in 25 Years: 89.5 Combined Ratio

The US property and casualty (P&C) insurance industry delivered a historic first quarter in 2026, posting a combined ratio of 89.5 before policyholder dividends — the best first-quarter underwriting result in at least 25 years, according to S&P Global Market Intelligence (S&P GMI). Including policyholder dividends, the first-quarter ratio was 91.9, better than any comparable result recorded since 2006. (A combined ratio below 100 indicates an underwriting profit.) In dollar terms, the underwriting gain was approximately $22.1 billion.

The result was driven primarily by exceptional performance in the homeowners multiperil and private passenger auto lines. The homeowners multiperil loss ratio shrank dramatically to 44.3 in Q1 2026, compared to a high of 102.3 in Q1 2025 — when the Los Angeles wildfires drove catastrophic losses. Other property lines, including fire and the property portion of commercial multiperil, also showed significant improvements. The first-quarter 2026 result benefited from a notably quiet catastrophe period relative to the wildfire-ravaged opening of 2025.

In private passenger auto — the largest personal insurance line — the direct incurred loss ratio was 60.4 in the quarter, only 0.6 points lower than Q1 2025 but a striking 15.4 points lower than Q1 2023, when the industry faced rapid loss-cost inflation. The auto line's recovery from the inflationary shock of 2022–2023 has been one of the defining profitability stories of the period. Notably, all seven of the biggest personal auto insurers — Progressive, Allstate, Berkshire Hathaway's GEICO, State Farm, USAA, Farmers Group, and Liberty Mutual — each posted underwriting gains exceeding $1 billion in the quarter.

However, S&P GMI was careful to flag significant headwinds beneath the record headline. The industry faces rapidly mounting competition in private auto, plunging commercial property rates, and persistent challenges in casualty lines, where 'other liability' loss ratios reached concerning levels driven by social inflation, expanding jury awards, and litigation abuse. These casualty pressures — affecting commercial auto, general liability, and umbrella business — represent the primary structural risk to the industry's profitability as the favourable property and auto dynamics potentially normalise.

The Q1 2026 result builds on a strong full-year 2025, when private US P&C insurers booked an estimated net underwriting gain of approximately $63 billion (up from $23 billion in 2024) and policyholders' surplus climbed to $1.2 trillion. Fitch projects the full-year 2026 combined ratio in the 96-97% range, assuming a more typical hurricane season and less favourable reserve development.