A new report from Swiss Re projects a favourable 2025 outlook, with the U.S. property & casualty industry expected to maintain a 10% ROE through 2026, as improved investment returns help offset weaker underwriting profitability despite historically strong, though slowing, underlying results.

swiss-re-logoAccording to Swiss Re’s new report, the US P&C industry recorded a 99% combined ratio in the first quarter of 2025, which they said was an impressive result given the California wildfires, while also signalling strong underlying profitability.

However, as per the report, rising capacity and competition will begin to erode underlying results, while elevated catastrophe activity has continued through the second quarter.

“Rate gains are easing across many commercial and personal lines where insurers assess pricing to be adequate and are targeting expanded market share in spite of elevated uncertainties. We see headwinds to premium growth building, which may be compounded if exposure growth slows,” Swiss Re said.

With this in mind, the reinsurer has forecast ROE at 10% this year and next, a slight decline from 11% in 2024 after elevated catastrophe activity in the first half of the year.

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“The underwriting tailwinds that drove 2024 improvements, strong premium growth, easing inflation and low claims severity growth, are mostly past,” Swiss Re added.

The report continued, “We see premium growth easing this year amidst rising competition, especially in commercial property and personal lines. Potential tariffs could push up claims costs. Investment return gains have slowed as the gap between portfolio and market yields narrows

The firm has additionally forecast direct premiums written (DPW) growth of 5.5% in 2025 and 4% growth in 2026.

“In Q1 of 2025, premium growth dipped below 7% for the first time since Q1 of 2021. Historically strong growth in the past four years was first driven by commercial line premiums recording double-digit gains in 2021-22, and then by personal lines in 2023-24. Today, growth rates are converging to the mid-single digits,” Swiss Re concluded.

The post Swiss Re projects 10% ROE for US P&C insurance in 2025 on investment gains appeared first on ReinsuranceNe.ws.

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