The US property and casualty (P/C) insurance industry experienced a considerable financial recovery in 2024, marking its first underwriting profit since 2020. This positive development, as reported by AM Best, highlights a significant shift from the losses incurred in the previous year.
Key Findings from AM Best’s Report
AM Best’s report, “First Look: 2024 US Property/Casualty Financial Results,” details the industry’s performance based on annual statutory statements submitted by March 11, 2025. The data encompassed approximately 97% of the industry’s total net premiums written.
In 2024, the industry achieved a net underwriting gain of $22.9 billion, a dramatic improvement compared to the $21.3 billion underwriting loss recorded in the previous year. The combined ratio, a key metric for the insurance industry, improved by 5.0 percentage points, reaching 96.6. This indicates that the industry is paying out less in claims and expenses relative to the premiums it’s collecting. While catastrophe-related losses remained consistent with the prior year, accounting for 8.7 percentage points on the combined ratio, the overall underwriting results were notably better.
The report specifically attributes the improvement in underwriting results primarily to the performance of the personal lines segment. A 9.8% increase in net earned premiums helped offset a rise in incurred losses and loss adjustment expenses, and a 9.8% increase in other underwriting expenses. Furthermore, the challenges faced in the personal lines segment did not translate to a rise in downgrades. In fact, a separate AM Best report indicates a decrease in issuer credit rating downgrades for P/C insurers, falling to 43 from 55 the previous year.
Pre-tax operating income saw a substantial increase, rising by 123.5% to $109.3 billion. This growth was driven by the underwriting gain and a 21.3% increase in earned net investment income. The industry’s net income also soared to $169.3 billion, representing an 89.8% increase from the prior year. This overall income growth was further bolstered by a $22.8 billion shift in net realized capital gains at four Berkshire Hathaway Insurance Group companies.
Industry surplus, a measure of financial strength, grew to $1.1 trillion by the end of 2024. The increase came from a combined $174.1 billion in net income and contributed capital. This was partially offset by a $12.9 billion change in unrealized losses, $3.7 billion in other surplus reductions, and $85.9 billion in stockholder dividends.
With the return of underwriting profitability after a period of losses, the industry is well-positioned to address future risks and navigate changing market dynamics.
