September 04, 2025

By Cindy Beaulieu, Chief Investment Officer - North America; Matt Reilly, Head of Insurance Solutions

 

Strong premium growth, profitable underwriting and higher reinvestment rates are all significant tailwinds for the property and casualty industry in 2025. Conning’s industry outlook remains favorable and many P&C insurers¹ are helping themselves by broadening their investment strategies to include less traditional assets. 

Despite the challenges of the past several years, including inflationary pressures, elevated CAT activity and a hardening reinsurance market, the industry has performed admirably. We expect the P&C industry will see premium growth over the next few years and remain profitable (see Figures 1 and 2), with elevated levels of investment income being a significant factor for the latter.

The advent of higher inflation presented both a challenge and an opportunity for P&C insurers.

With limited pricing power and weak premium growth in 2019-20, the immediate inflationary and supply shocks during the pandemic - combined with generally elevated cat risk - left insurers exposed to higher claims’ payouts.

The end of the pandemic, however, saw a strong rebound for P&C insurers as premiums grew at a 7.9% annual rate between 2020 and 2024, driven by economic growth and inflationary pressures. Over the next few years we believe premium growth will remain healthy but moderate to an average of 6.8% for 2025-2027.

Our base case is also for continued industry profitability with an expected combined ratio of 95.9% for 2025-2027, an improvement from the 99.8% of the 2020-24 era. 

One potential disruptor to our forecast is CAT activity. The first half of 2025 witnessed elevated CAT levels that will pressure reinsurance and property line results, as loss costs have been higher due to the recent inflationary environment.

 

Click below to continue reading Conning’s Viewpoint, “P&C Investment Trends: Expanding Universe and Evolving Strategies Aid Diversification - and Profitability."

 

  

Footnotes

1. Industry forecasts for premium, losses, expenses, underwriting operations are representative of the entire industry. Investment strategy trends and exhibits remove Berkshire Hathaway and State Farm due to their outsized impact and unique investment strategies. 

About Conning

Conning (www.conning.com) is a leading investment management firm with a long history of serving insurance companies and other institutional investors. Conning supports clients with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.

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