Armchair analysts prognosticating the impending collapse of property & casualty insurance companies were proven wrong by recently released 2024 financial performance results. The overall industry’s underwriting results were profitable. The 2024 combined ratio – losses and expenses divided by premium, was 96.6%, compared to the marginally unprofitable 2023 result of 101.8%. Last year’s profitable result is impressive in light of the fact that 2024 was an active year for hurricanes, with Helene and Milton alone causing $95 billion in losses.
The industry’s total premium grew in 2024, with $1.05 trillion in direct written premium, up from $969 billion in 2013. The dashboard below shows highlights of how the insurance industry performed in 2024 compared to 2023.
| 2023 (numbers in $ billion) | 2024 (numbers in $ billion) | |
| Direct Written Premium | 969 | 1,046 |
| Ceded to reinsurers | 111 | 117 |
| Net Written Premium | 858 | 929 |
| Combined Ratio | 101.8% | 96.6% |
| Expense Ratio | 25.0% | 25.2% |
| Loss Ratio (including LAE) | 75.4% | 71.0% |
| Loss Ratio not including LAE) | 66.5% | 61.6% |
| Underwriting Gain | -20 | 27 |
| Bond Yield | 3.7% | 4.1% |
(Source: CapitalIQ Pro)
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Consistent with recent years, the 2024 operating ratio, which measures the industry’s overall profitability, including investment income, was approximately 7%. The average net profit margin for Fortune 500 companies is 13%, demonstrating that the insurance industry is modestly, not wildly profitable. Data on profitability by line of business has not been reported yet.
There were two additional interesting developments revealed in the reported results. First, the proportion of industry premium coming from personal lines insurance (private passenger automobile and homeowners’ insurance), which has traditionally been approximately 47% of total industry premium, is now 51.4% of total premium. This is because there were steep rate increases in many states for both auto and homeowners’ insurance outpacing rate increases for commercial insurance products. Another surprise was in the industry’s income statement, which reported $79 billion in realized capital gains in 2024. That enormous number was driven almost exclusively by one insurer, Berkshire Hathaway. In 2024 the sage of Omaha sold approximately $80 billion of Apple stock. Berkshire Hathaway’s Apple holdings generated a near-800% return since first disclosing its holdings in the iPhone maker. Prior to the massive sale Apple represented 39.7% of Berkshire Hathaway’s stock portfolio.
Throughout 2024 there were pronouncements that the insurance industry is on its knees and incapable of dealing with claims ballooning in magnitude from climate change impacts. One such report was alarmingly titled “End of Days? Is the Insurance Industry About to Collapse?” The actual numbers contradict the catastrophe scenarios in which disasters cause premiums to skyrocket, forcing insurers out of the market. Insurance companies, supported by reinsurers, are in the business of covering losses from natural disasters. To be sure, insurers and reinsurers prudently maintain vital “catastrophe budgets,” which estimate how much they will pay out in natural catastrophe claims.
Whither 2025?
Looking ahead to the rest of 2025, one factor likely to impact the insurance industry, and worthy of keeping a weather eye on, is the impact of the second Trump administration. There have already been negative consequences arising from job cuts at the National Oceanic and Atmospheric Administration (NOAA). NOAA’s satellite data and reports on weather and climate patterns are used as inputs for climate models used by insurers to calculate catastrophe budgets, for example. The data supplied by NOAA is so valuable that five of the climate research experts out of the 18 discussed in R Street’s “The Truth About Natural Catastrophes” study are from NOAA.
A further source of concern for insurers is the presence of plaintiff trial lawyers in key administration positions. For example, RFK Jr. is of counsel at plaintiff bar giant Morgan & Morgan, having been previously on the firm’s payroll. Notwithstanding a March 22 presidential memo targeting Big Law firms, Donald Trump’s own personal and business history suggests he is no enemy of frivolous litigation, having been involved in an estimated 4,000 lawsuits, both as plaintiff and defendant. We may therefore see a torrent of litigation, with some impact on liability insurance.
Insurance industry results in 2024 were strong. Investors maintain confidence in insurers’ managing their business. The S&P Composite 1500 Property & Casualty Insurance Index has returned 7.52% this year, an impressive performance given the blood running down Wall Street in recent weeks. However, with chaos in Washington likely to impact insurers, fasten your seatbelts because there may be turbulence ahead.
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