Moody’s Ratings, the credit rating agency and research firm, reported that US property and casualty insurers delivered stronger profitability in the first half of 2025, even as California wildfires in the first quarter drove substantial catastrophe losses.
According to Moody’s, a representative sample of 20 rated insurers posted net income of $27.0 billion for the period, a 13% increase compared with the same timeframe in 2024. The improvement was fuelled by rising personal auto results and robust investment income, which more than offset heavier catastrophe claims.
Moody’s noted that catastrophe losses reached $16.1 billion for these insurers in the first half of 2025, up 35% from a year earlier and representing the largest first-half loss burden the group has experienced in many years.
While wildfire activity was the main driver in the first quarter, the second quarter saw relatively lighter catastrophe costs. Moody’s also pointed out that reserve releases, particularly in personal auto and workers’ compensation, provided further support to overall earnings.
Moody’s explained that reinsurers carried a meaningful share of the wildfire impact, reflecting the size of the events. A group of US and Bermuda reinsurers rated by Moody’s reported an average combined ratio of 96.1% for the first half of the year, up from 87.3% in 2024, largely because of the wildfire claims. Even so, Moody’s highlighted that reinsurers still managed to post healthy returns on equity, supported by higher levels of investment income.
Looking ahead, Moody’s emphasised that the second half of the year is typically shaped by North Atlantic hurricanes, which often become the key driver of insured catastrophe losses.
As of early September 2025, roughly six named storms had formed in the Atlantic basin, but none had made landfall in the US. Moody’s stressed that outcomes from the remainder of hurricane season will heavily influence full-year results for insurers and will also play a major role in reinsurance pricing at the January 2026 renewals.
Moody’s found that homeowners insurance results were under particular pressure from the California wildfires. A sample of five insurers increased homeowners premiums by 12% in the first half of 2025, driven by higher pricing and increased exposure on existing accounts.
Moody’s reported that their weighted average combined ratio climbed to 108.0% from 105.4% the year before, with catastrophe costs accounting for the increase. Excluding catastrophe events, Moody’s said the underlying profitability of homeowners lines improved.
In personal auto, Moody’s observed steady improvement in underwriting results. Seven insurers analysed by the firm grew personal auto premiums by 10% in the first half of 2025 through both rate hikes and larger policy counts.
According to Moody’s, the weighted average combined ratio in personal auto improved to 85.5% from 88.6% the prior year, reflecting reduced claim frequencies along with earned rate increases that helped offset higher claim severities.
Commercial insurance also remained profitable, with Moody’s calculating a weighted average combined ratio of 93.1% for the first half of 2025, compared with 90.5% the year before. Moody’s noted that some commercial carriers were affected by wildfire-related losses in their personal lines operations.
The firm pointed to data from Marsh showing further increases in casualty pricing and decreases in property pricing through mid-2025, and Moody’s added that reinsurance buyers expect property reinsurance rates to continue declining in 2026, while casualty rates appear stable to rising.
Moody’s concluded that US P&C insurers remain strongly capitalised. The firm reported that aggregate shareholders’ equity for the group reached $337 billion as of June 30, 2025, an 8% increase from year-end 2024. Moody’s attributed this growth to higher retained earnings and reduced unrealized investment losses, and said that as insurers reinvest maturing bonds, they will continue to benefit from today’s higher yields.
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