U.S. P&C insurers post strongest first-quarter underwriting result in 25 years

The bigger question after the U.S. property-casualty industry’s blockbuster first quarter is not whether carriers can spend more, but whether they will spend differently. With a combined ratio of 89.5 before policyholder dividends and 91.9 including dividends, the sector turned in its strongest first-quarter underwriting result in at least 25 years, and that kind of profitability changes the tone of every technology budget meeting.

The quarter produced $22.10 billion in underwriting gains, a level that stands out even in a market accustomed to watching catastrophe losses, rate momentum and reserve development. The best performance came from homeowners multiperil and private auto, two lines that have defined the industry’s recent repair job. In S&P Global Market Intelligence’s reading of the quarter, the before-dividend combined ratio came in even better, at 89.1, reinforcing how sharp the underwriting improvement was across the business.

That matters for software vendors because carriers do not buy transformation in a vacuum. When the balance sheet is under strain, technology projects get judged against immediate loss control. When underwriting is this strong, the conversation shifts toward preserving the edge. That usually means more appetite for pricing tools, claims automation, policy administration modernization and distribution tech, but also less patience for systems that cannot show a clear return in efficiency or underwriting discipline.

The question, though, is durability. Swiss Re had already said the U.S. P&C industry posted a 99% combined ratio in the first quarter of 2025, while warning that rising capacity and competition would start to erode results. It projected premium growth of 5.5% in 2025 and 4% in 2026. Fitch Ratings said on January 21 that the market would keep softening in 2026 under pressure from increased competition, abundant capital and downward pricing pressure. In January, S&P Global Market Intelligence said 12 of the 16 largest U.S. P&C insurers were expected to show year-over-year combined-ratio deterioration, with a median estimate of 92.1%.

The individual carrier results show why the industry is still cautious. Progressive added 3.3 million policies in force in the quarter and ended March with 39.57 million, overtaking State Farm as the biggest private auto insurer. Allstate reported $2.66 billion in underwriting income, while Chubb posted growth in its North American P&C segment. State Farm, meanwhile, reported a $1.5 billion underwriting gain for its property-casualty businesses in 2025 after losses of more than $6 billion in 2024 and more than $10 billion in each of the two prior years.

The message for technology buyers is clear: strong first-quarter results may unlock modernization budgets, but the next wave of spending will be narrower and more disciplined. On earnings calls, strong earnings, rising competition and AI were the dominant themes, and that is where the market now sits, with profitability giving carriers room to invest, and competition ensuring they will only back systems that sharpen the core business.