Fitch Ratings released its 2026 outlook for the U.S. property and casualty insurance sector on December 5, 2025. Fitch kept a neutral fundamental sector view for both commercial and personal lines. The agency said the industry enters 2026 on a solid footing, supported by strong overall statutory performance, continued favorable results in personal auto insurance, a benign hurricane season, and higher reserve releases.
Fitch expects industry results to improve in 2025. The agency projected that the industry combined ratio will improve by nearly three percentage points in 2025, reaching 93.7%. Fitch also projected that statutory net earnings, adjusted for unusual realized investment gains from Berkshire Hathaway, will improve relative to the prior year. These expectations reflect the performance environment Fitch observed across the sector into late 2025.
Looking ahead, Fitch expects stable conditions in 2026, although underwriting profitability may ease slightly. Fitch projected a combined ratio between 96% and 97% for 2026, which would represent a slightly lower underwriting profit than 2025. Fitch attributed the expected stability to continued strong performance in both personal and commercial lines. At the same time, Fitch noted that headwinds could challenge top-line growth, even if underwriting results remain steady.
Fitch also highlighted several macro risks that could influence results in 2026. Senior Director Tana Marcom said Fitch expects general stability across personal and commercial lines in 2026. However, she noted that increasing competition, geopolitical uncertainty, slowing economic growth, and a difficult legal environment could pose challenges. Fitch said these factors may affect pricing discipline, reserve adequacy, and claims management. Fitch did not specify outcomes tied to these risks, but included them as considerations for the sector’s operating environment.
On the investment side, Fitch anticipates modest pressure from declining interest rates. Fitch said falling rates are likely to modestly pressure net investment income. Even so, Fitch expects book yields to remain strong. In line with this view, Fitch projected the adjusted industry return on surplus at 10.1% in 2025 and 9.1% in 2026. These projections align with Fitch’s broader assessment of a stable sector performance trend into next year.
Overall, Fitch’s neutral outlook reflects the agency’s view of the industry’s capacity to manage current conditions. Fitch stated that the sector’s outlook reflects the industry’s ability to navigate ongoing challenges and capitalize on favorable market conditions. The full report, titled “U.S. Property/Casualty Insurance Outlook 2026,” is available through Fitch Ratings.