The US property and casualty industry nearly tripled its net underwriting income in the first half of 2026. The result reflects a market where property and casualty lines are moving in sharply different directions.
Net underwriting income reached $31.2 billion in the first six months of 2026, up from $10.9 billion in the same period last year, according to a new AM Best report. The industry's combined ratio improved four points to 92.5. Catastrophe losses contributed 6.2 points to that ratio, down from 10.8 points in the first half of 2025 when the California wildfires hit.
AM Best's report is based on statutory statements received as of August 24, representing an estimated 97% of total industry net premiums written.
A lighter catastrophe period does not mean underlying loss trends have shifted. Robert Gordon, senior vice president at the American Property Casualty Insurance Association (APCIA), put it plainly in a separate report last week. "While insured natural-catastrophe losses provided a temporary reprieve in the first half of 2026, bodily injury and commercial liability losses continued to worsen," he said. "Excess liability, umbrella liability, commercial auto, and other casualty lines experienced ongoing pressure from escalating claim severity, nuclear verdicts, and rising medical costs."
That pressure is visible in how carriers are behaving. AM Best maintains negative outlooks for both commercial auto and general liability. Its analysis found commercial auto recorded another $2 billion in reserve deficiencies in 2025, tied largely to the 2023 and 2024 accident years. In some markets, carrier appetite has narrowed to the point where the answer does not change no matter how many markets a submission reaches.
Premium growth is also slowing. Net written premiums grew 3% in the first half of 2026, based on AM Best data, well below the pace of recent years. Property savings may be absorbed by casualty increases rather than flowing to clients as net relief.
The $31.2 billion underwriting gain carries one item that complicates the comparison. AM Best notes $6.2 billion in dividends to policyholders offset the result, predominantly $5 billion paid by State Farm. That makes the aggregate partly a function of one carrier's decisions rather than a uniform market improvement.
A 12% increase in net investment income, combined with the underwriting gain, nearly doubled pre-tax operating income to $79.1 billion. Net income rose 55% to $77.8 billion. Greater capacity heading into the second half gives insurers more room to compete on property. On casualty lines where loss trends remain adverse, that capacity does not automatically follow.
Property conditions are competitive and casualty conditions are not. The two do not offset each other simply because they appear on the same balance sheet. Accounts with clean property profiles and difficult casualty exposures are experiencing that split at renewal, where nuclear verdicts and social inflation keep pushing commercial auto rates higher despite 59 consecutive quarters of increases, according to the Council of Insurance Agents and Brokers (CIAB).
