US P&C Insurance Industry Posts Record $22.1 Billion Q1 2026 Underwriting Gain — Best Result in 25 Years

The US property and casualty insurance sector has delivered its most impressive quarterly underwriting result in a generation, according to a comprehensive analysis published by S&P Global Market Intelligence. The Q1 2026 combined ratio of 89.5% — calculated before policyholder dividends — stands as the best first-quarter underwriting performance recorded in at least 25 years, surpassing any comparable prior-period result on both nominal and inflation-adjusted bases. The resulting underwriting gain of approximately $22.1 billion reflects a sector that has undergone significant transformation following years of catastrophe-driven losses, inflation-related claims pressures, and pandemic disruption.

The headline driver of the strong result was the homeowners multiperil line, where the direct incurred loss ratio shrank dramatically to 44.3% in Q1 2026 — compared to 102.3% in Q1 2025, when catastrophe losses from the January 2025 Los Angeles wildfires caused severe underwriting losses. The 2025 wildfire season, which caused estimated insured losses well above $30 billion, created a high prior-year comparison base that the Q1 2026 data is measured against. AM Best noted catastrophe losses accounted for just 4.2 points on the Q1 2026 combined ratio, down sharply from an estimated 14.5 percentage points a year earlier.

Private passenger auto also delivered strong results, with a direct incurred loss ratio of 60.4% — some 15.4 points lower than Q1 2023 when loss-cost inflation was rampant. Among the major personal auto insurers, Progressive Corp., Allstate, GEICO (Berkshire Hathaway), State Farm, USAA, Farmers Group, and Liberty Mutual all posted underwriting gains exceeding $1 billion each. State Farm recorded nearly $2 billion in underwriting gains, a remarkable swing after years of losses in that line.

However, the broadly positive picture carries important caveats. The other liability line — general liability excluding medical malpractice — posted its highest first-quarter direct incurred loss ratio in 24 years at 65.8%, reflecting ongoing social inflation pressures and escalating litigation costs. Commercial auto also remained above breakeven. S&P GMI projects that auto combined ratios will edge back toward 97–98% by 2027, suggesting the current profitability is unlikely to persist without continued pricing discipline.