US Property & Casualty outlook: returns normalizing after outlier year
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The US P&C industry has moved past its cyclical earnings peak and is entering a phase of gradual but persistent margin compression. The strong performance of 2025 was supported by favorable reserve development, firm pricing and rising investment income – tailwinds that are now fading. Today, insurers are increasingly cutting prices amid a still-elevated loss cost environment, signaling a transition to lower returns. As competition intensifies, we expect ROE to normalize at around 11% in 2026 and 9% in 2027, with premium growth slowing to around 3%.
Figure 1: Reserve development 2005-25, calendar year basis