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Fitch Ratings’ review of GAAP financial results for 41 North American (NA) re/insurers showed strong operating returns, strong underwriting results, and higher investment income in the first half of 2025, despite elevated catastrophe activity.
Catastrophe losses rose 64% to $22 billion, driven by the January wildfires in Southern California. Natural catastrophes had the largest impact on the reinsurer segment, increasing the group’s combined ratio by 12.5% in H1’25, up from 2.7% in H1’24.
Despite this, the group still reported an underwriting profit with a 96.9% combined ratio.
Group common shareholders’ equity rose 5%, supported by positive net earnings and a modest improvement in unrealised bond positions. The increase was tempered by a 13.1% growth in capital returned to investors. The change in capital return included $2.9 million of share repurchases in the prior year period for Berkshire Hathaway Corporation (BRK) that were not repeated. Excluding BRK, the group’s capital return rose 36% in H1’25.
Reserve releases improved the combined ratio by 1.9 points, up from 1.4 points in H1’24, reflecting continued favourable prior-year development.
Social inflation heightened loss cost trends, particularly in commercial auto, general liability, and excess casualty, leading several re/insurers to report modest reserve charges. Significant workers’ compensation reserve releases offset much of this pressure.
Core fixed-income portfolio returns remained strong in H1’25, with higher yields and larger invested asset balances driving investment income 13% higher year over year.
The group’s annualised aggregate investment yield reached 3.9%, up from 3.4% in full-year 2024. Non-life insurers’ relatively short-duration bond portfolios position them well to benefit from reinvesting at today’s higher yields.
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