The U.S. property and casualty insurance industry has turned a corner, reporting its first full-year underwriting gain in four years. This positive shift has contributed to a significant increase in net income, which soared to $170 billion in 2024. According to a report from Verisk and the American Property Casualty Insurance Association (APCIA), this figure includes $70 billion from investment gains realized by Berkshire Hathaway. If you exclude this large investment return, the industry’s net income for the year stands at an impressive $100 billion.
This year marks a notable milestone, as it’s the first time the property and casualty sector has exceeded $100 billion in net income within a calendar year. The reports highlight a remarkable change in underwriting results, moving from a net loss of over $20 billion in 2023 to a net profit of more than $20 billion in 2024. Specifically, the underwriting gain for 2024 is estimated at $24.8 billion, a stark contrast to last year’s $21.8 billion loss.
Saurabh Khemka, a co-president at Verisk, pointed out that while many of the issues that caused losses in 2023 continued into 2024, the industry managed to adjust premiums to more appropriate levels. This adjustment is what led to the underwriting gain, the first since 2020.
In terms of premiums, the industry saw net written premiums rise by 8.7% to $926 billion in 2024, compared to $851 billion the previous year. Earned premiums also grew, increasing by 9.8% to $895 billion. The combined ratio, a key measure of profitability, improved significantly to 96.4 in 2024, down from 101.6 in 2023.
Despite this positive news, challenges remain. Property catastrophes continue to impact the industry, with 2023 being one of the worst years for such losses since 1950. Hurricane Milton and several late-season storms caused a surge in catastrophe claims, which were 113% higher in the fourth quarter of 2024 compared to the same period in 2023.
Looking ahead, Robert Gordon from APCIA noted that homeowners’ insurers could face seven consecutive years of net underwriting losses, especially with record losses expected from California wildfires earlier this year. Even with these challenges, the significant increase in net income has bolstered policyholder surplus to nearly $1.1 billion.
In summary, while the property and casualty insurance industry is experiencing a rebound with improved underwriting results and net income, it continues to face substantial risks from natural disasters that could threaten this newfound stability.