The US property and casualty industry recorded its strongest financial performance in 10 years in 2025, according to a new AM Best report. The sector generated $84 billion in combined underwriting gains across the past two full calendar years, reversing $51 billion in losses from 2021 through 2023.
The turnaround began in 2024 with a $45 billion net underwriting gain and extended through 2025. That result held despite the Los Angeles wildfires, which produced material losses in the first part of the year. AM Best detailed the findings in its Best's Special Report, 2025 P/C Snapshot: Strongest Performance in a Decade Showcases Resilience.
Personal lines led the recovery. The segment's underwriting profit nearly quadrupled to more than $45 billion in 2025, while commercial lines profit more than doubled to over $19 billion.
Private passenger auto posted one of the most-watched recoveries in the sector. The line's combined ratio fell well below 100 in both 2024 and 2025, after exceeding that threshold in each of the prior three years.
"Insurers underwriting both personal auto and homeowners' lines of coverage have reaped the benefits of technology and data analytics to supplement underwriting, claims handling, and ratemaking," said David Blades, associate director at AM Best.
Rate momentum entering 2024 flowed through net earned premium across both years. That pricing carryover was a central factor behind the bottom-line results for both lines, Blades said.
Commercial lines maintained consistent underwriting profitability across the full five-year period covered by the report. AM Best attributed the performance to sustained pricing adequacy, improved investment returns, and generally adequate reserves. The sector-wide profit, however, masks a fault line: casualty is pulling in a different direction from the rest of the market.
"Casualty lines, specifically commercial auto liability and other liability (occurrence) lines remain pressured by adverse development and elevated claims severity," said Christopher Graham, senior industry analyst at AM Best. He added that calendar-year underwriting performance varies widely across major commercial lines, even as aggregate results remain favorable.
Commercial auto liability recorded $2 billion in additional reserve deficiencies in 2025. AM Best identified the 2023 and 2024 accident years as the primary source of that shortfall.
Social inflation, aggressive litigation tactics, third-party litigation funding, and rising jury awards are driving claim trends across commercial liability lines, the report said. Annual liability claim costs rose approximately 7% in 2024, the highest annual increase in two decades, according to the Swiss Re Institute.
North Carolina this year became the first US state to ban third-party litigation funding outright. Casualty underwriters and brokers are watching the development as a potential model for other states.
The AM Best data shows a market where headline numbers are favorable but loss cost pressure is real for brokers and underwriters placing casualty business. Pricing and coverage terms in commercial auto and general liability are likely to stay under strain until reserve development stabilizes.
The report is based on NAIC Insurance Expenses Exhibit financial statements received and aggregated by AM Best as of June 2.
