US Property & Casualty Outlook: Results Stabilize as Competition Heats Up

According to the report titled "US Property & Casualty Outlook: Results Stabilize as Competition Heats Up," published by Swiss Re and authored by James Finucane, senior economist, and Thomas Holzheu, chief economist, Americas, the US property-casualty (P&C) industry is projected to experience earnings stability in 2025 despite ongoing uncertainties in fiscal and monetary policy, tariffs, and geopolitics. Swiss Re forecasts a return on equity (ROE) of around 10 percent in both 2025 and 2026, driven by steady underwriting results and improved investment income. 

Per the report, the industry has seen 4 consecutive years of premium growth nearing 10 percent, which has helped insurers recover from increased claims costs beginning in 2021. However, Swiss Re notes that premium growth is expected to slow to 5 percent in 2025 and 4 percent in 2026 as insurers reach rate adequacy and prioritize growth. 

Swiss Re's analysis highlights that profitability in the US P&C industry is stabilizing, with an ROE forecasted to remain at 10 percent in 2025. This follows a significant recovery bolstered by easing inflation and strong premium growth. However, challenges such as social inflation and reserve adequacy could pose downside risks to claims costs. 

The report projects that direct premiums written will grow by 5 percent in 2025 and 4 percent in 2026, following a deceleration from nearly 10 percent growth in 2024. Swiss Re attributes this slowdown to heightened competition and external factors like tariffs and reduced migration, which could influence rate adjustments and growth trends. 

Swiss Re stated that the industry's combined ratio is expected to remain at 98.5 percent in 2025, slightly deteriorating to 99 percent in 2026. This projection reflects slower premium growth balanced by reduced claims pressure from economic inflation, which is forecasted to average 2.5 percent in 2025 and 2.4 percent in 2026. 

Swiss Re emphasized the impact of natural catastrophes on the industry in 2024, noting that 24 weather events in the United States caused economic losses exceeding USD 1 billion each. Insured losses from hurricanes Helene and Milton alone approached USD 50 billion, contributing significantly to the industry's loss ratio. 

Investment income remains a bright spot for the industry, as Swiss Re expects portfolio yields to rise to 4.0 percent in 2025 and 4.3 percent in 2026, up from 3.7 percent in 2024. However, the gap between new money yields and portfolio yields is narrowing, which may limit future tailwinds from investment income.