P/C insurance earnings jump in 2025, Moody’s Ratings says

Property/casualty insurers generated strong returns in 2025 as pricing conditions shift, Moody’s Ratings reported.

A representative group of 20 P/C insurers Moody’s rated generated net income of $69 billion in 2025, up significantly from $53.4 billion in 2024. This reflects strong underwriting performance, particularly in personal auto, and higher net investment income.

Although pricing dynamics vary by product line, Moody’s expects the industry to continue to generate solid, if lower, returns in the year ahead.

Catastrophe losses declined slightly while personal auto drove a significant increase in favorable reserve development. The group of P/C insurers reported nearly $19 billion in catastrophe losses in 2025, slightly lower than the $20.8 billion in catastrophe losses in 2024, driven by the California wildfires early in the year. Reserve development was more favorable in 2025, largely driven by personal auto.

Homeowners insurers reported solid underwriting profits as rate increases continue to moderate. A representative group of insurers reported 10.4% growth in homeowners premiums written and lower combined ratios in 2025 compared to the prior year. Following several years of rate increases and other underwriting actions, Moody’s expects rate increases to moderate further in 2026.

Personal auto insurers are shifting to growth as auto insurance generates strong profits. A group of personal auto insurers reported a strong weighted average combined ratio of 86.4% in 2025, down from 88.4% in 2024. Given strong profitability, Moody’s expects more rate competition in 2026 with some rate declines as carriers seek to grow and increase policy count.

Commercial insurers generated strong profitability. A group of commercial carriers achieved a weighted average combined ratio of 90.0%, slightly better than 90.7% in 2024. The Marsh pricing index showed ongoing rate increases in casualty pricing and declines in property pricing. Moody’s expects this group of carriers to maintain good underwriting profitability in 2026 despite slower exposure growth and greater price competition.

Insurers remain well-capitalized, and share repurchases are likely to pick up as market transitions. Shareholders' equity for the group increased to $361.2 billion, up 16% from the prior year, driven by strong earnings. Insurers are in varying stages of implementing artificial intelligence strategies with future prospects for revenue growth and operational efficiencies. Given solid capital levels and ongoing profitability, Moody’s expects share repurchases to increase in the year ahead.