We are delighted to share the second report in our Industry Primers series, this one on property and casualty insurance and reinsurance. The series exists to help fundamental, long-term investors expand and deepen their circle of competence, one industry at a time, and your feedback on what was useful and on which industries to cover next shapes what we produce. Two podcast episodes complement the report, the first telling the industry’s story and the second digging deeper into the fundamentals from an investor’s standpoint. The companion slide deck (free to access) and the full research report (members only) follow below.
Most of the industry’s capital sits in balance sheets that cannot be bought, behind a listed universe that one company dominates. The US industry wrote about $1.1tn of direct premiums in 2024, about $514bn of it in personal auto and homeowners, and closed the year with policyholders’ surplus of $1,132bn. Behind the primary carriers stood $800bn of global reinsurer capital at June 30, 2026. The largest American writer, State Farm, has no shares; it wrote $94bn of direct premium in 2023, 9.9 percent of the market. Of the forty-four listed majors the report features, Berkshire Hathaway (NYSE: BRK.B) alone was about 38 percent of the market value at the September 4, 2026 close, and without it Continental Europe’s four reinsurers, worth about $172bn between them, form the largest bloc.
The listed survivors beat the index by about a point a year, and the companies that did not survive pull the industry’s true base rate lower. Nineteen listed US insurers returned a median 12 percent a year with dividends reinvested to September 4, 2026, against a median 11 percent for the S&P 500 over the same windows, and fourteen of the nineteen were ahead. Kinsale Capital (NYSE: KNSL) compounded at 35 percent a year from its July 2016 listing against 15 percent for the index, while AIG (NYSE: AIG) returned minus 1.8 percent a year over about 34 years. Of roughly twenty companies formed in the Bermuda classes of 1993, 2001 and 2005, four were still independently listed on that date, and the insolvencies paid their shareholders nothing.
The companion deck. Property and Casualty Insurance & Reinsurance: a self-contained summary of the report.
Key findings
The report follows the industry from the London coffee house to the renewals of 2026, and every figure in it is dated and sourced in the notes. These are the main findings of each part.
Underwriting results in this industry diverge more widely than in almost any other financial business, and the advantages behind them can be read in public documents. In December 1951 a twenty-one-year-old Warren Buffett pointed out that GEICO had earned an underwriting profit of 28 percent of premiums in 1949, against 6.7 percent for 135 stock casualty and surety companies, because it sold direct and had no agents. In FY2025 GEICO, part of Berkshire since 1996, ran an 85 percent combined ratio on a 12 percent expense ratio, against a statutory 92 for the US industry. Kinsale reported 76 percent, RLI (NYSE: RLI) 84 percent in its thirtieth consecutive year of underwriting profit, and Travelers (NYSE: TRV) 90 percent. (Part I, Orientation, Chapter 1)
An insurer collects premiums before it pays claims and invests the money in between, so the combined ratio sets the price of its borrowing. The report calls an insurer a leveraged investment vehicle whose leverage is priced by underwriting. Berkshire held about $176bn of this float at December 31, 2025 and earned $9,460m of pre-tax underwriting profit on it, a cost of minus 5.5 percent a year. Return on equity is the underwriting margin times premium leverage plus the investment yield times asset leverage, less tax. Progressive (NYSE: PGR) earned 35 percent in FY2025 from a 13 percent margin at 2.9 times premium leverage, and RenaissanceRe (NYSE: RNR) 26 percent from a similar margin at 0.96 times, its return coming from the investment side. (Part I, Orientation, Chapter 2)
The industry’s history repeats one event, in which a correlated loss arrives, carriers learn they wrote more exposure than they knew, and capital is destroyed and then returns at a higher price. The Chicago fire of 1871 broke 68 of the 182 companies carrying its risks. San Francisco in 1906 wiped out the American industry’s profit of the preceding forty-seven years, while Munich Re (Xetra: MUV2) paid its 11 million marks in full. The professional reinsurers grew out of such fire losses: Cologne Re in 1846, Swiss Re (SIX: SREN) in 1863 and Munich Re in 1880. The liability century repeated the event slowly, and when incumbents stopped quoting in the mid-1980s, corporate buyers capitalized ACE with $285m and X.L. with about $410m in Bermuda. (Part II, Evolution, Chapters 4 and 5)
Each modern catastrophe destroyed capital and drew in new capital in a newer form, and few of the new companies lasted. Hurricane Andrew left eleven insurers insolvent in 1992, and new Bermuda classes raised $4.8bn in 1993, $8.5bn in 2001 and $13bn in 2005, nearly $5bn of the last in sidecars that could be wound up after one year. Most of their companies were later acquired, taken private or wound down. The survivors wrote less when prices fell: National Indemnity‘s premium fell from $366m in 1986 to $55m in 1999, and RLI has made an underwriting profit for thirty consecutive years at an average combined ratio of 88. (Part II, Evolution, Chapters 6 and 7)
The case studies show that a cost advantage does not prevent a solvency crisis, and that a published underwriting rule outlasts the people who wrote it. GEICO nearly failed in 1976 through its reserving and pricing, and Berkshire’s $46m for a third of the company by 1980 became $2.3bn for the other half in 1995. Progressive has published a 4 percent underwriting-profit objective since its 1971 public offering and still calls the resulting 96 combined ratio a constant. AIG failed three ways in 2008, only one of them in insurance, and its insurance companies stayed solvent throughout. Lloyd’s took twenty-one years to move from the first loss of its reinsurance spiral in 1988 to legal finality in 2009. (Part II, Evolution, Chapter 8)
Every intermediary between the insured and the reinsurer is paid whether or not the business makes money, and the profit pool has moved toward distribution. A premium can pass through seven stations, from the retail agent to the investor in insurance-linked securities. The US industry paid 11 points of net written premium in commissions and brokerage in 2023 and ran a 25 percent statutory expense ratio. In FY2025 the distributors earned margins of 23 to 37 percent on revenue that carries no underwriting risk, while the carriers earned 7.8 points of underwriting margin in a decade-best year, after losing money underwriting in 2022 and 2023. (Part III, Structure & Economics, Chapter 9)
The cycle exists because an insurer sets its price before it knows its cost, and the record results of 2025 came on falling prices. The US industry ran a statutory combined ratio of 92 in 2025 against 102 in 2023, with a net underwriting gain of $61bn against $22bn in 2024. Guy Carpenter’s property catastrophe rate-on-line index, which is not risk-adjusted, rose 28 percent at the January 2023 renewals and fell 16 percent for 2026, to 23 percent below its 2024 peak. Reserve releases from the hard years subsidize the prices of the soft ones, and US other liability booked $10bn of adverse development in calendar 2024 and $7.3bn in 2025. (Part III, Structure & Economics, Chapter 10)
Segment mix explains more of the dispersion in returns than management skill does, and few structural moats survive the record. In FY2025 the same return identity gave W. R. Berkley (NYSE: WRB) 21 percent on 16 points of investment income per dollar of equity and Chubb (NYSE: CB) 15 percent at 0.77 times premium leverage. The US industry ran at or above a 100 statutory combined ratio in four of the nine years to 2025, and of the four candidate moats the report keeps, only underwriting culture and specialization has repeatedly lasted a full cycle. Low-cost distribution is worth the spread between GEICO’s 12 percent expense ratio and 31 percent in the Business Insurance segment of The Hartford (NYSE: HIG). (Part III, Structure & Economics, Chapters 11 to 13)
The forty-four listed majors report under three accounting regimes, and none of their combined ratios can be compared with another’s until its basis is named. US GAAP filers strike the ratio on net earned premium and discount nothing, while IFRS 17 filers strike it on insurance revenue and usually discount. Munich Re’s 74 percent is struck on net insurance revenue, Sompo Holdings (TSE: 8630) reported 82 percent and Lancashire (LSE: LRE) 84 percent on a discounted basis, and Fairfax Financial (TSX: FFH) reported 93 percent explicitly undiscounted. (Part IV, The Players, Chapter 14)
The long-tenured owner-operators beat the index decisively over forty and sixty years, but the median owner-operator trailed it over the decade to 2025. Berkshire compounded per-share market value at 20 percent a year from 1965 to 2025 against 11 percent for the S&P 500, and Prem Watsa compounded Fairfax’s book value per share plus dividends at 19 percent a year over forty years. Over the decade to 2025, on that basis, three of ten allocators beat the index’s 15 percent: Kinsale at 27 percent, Progressive at 23 percent and Arch Capital (NASDAQ: ACGL) at 17 percent. Four of the twelve owner-operated companies the report compares pay the long-term award on per-share book or tangible book value. (Part IV, The Players, Chapters 15 and 16)
The largest US writer has no shares, and the mutuals and the state set the price the listed companies must meet. Four of the ten largest US groups are mutual or reciprocal, and their surplus has no cost of equity to meet, so they return it as price: State Farm began paying a $5bn cash-back dividend on more than 49 million vehicles on July 31, 2026. Florida’s Citizens fell from 1,407,805 policies in September 2023 to 266,093 on August 28, 2026, while California’s FAIR Plan levied a $1bn assessment in February 2025. Private capital enters mostly for fees, through managing general agents, fronting carriers and $145bn of third-party reinsurance capital at June 30, 2026. (Part IV, The Players, Chapter 17)
The calendar-year combined ratio is the figure management can shape, and the accident-year triangles that every US filer publishes are the honest record. Prior-year development lands in the year an estimate changes, not in the year the business was written. Travelers reported net favorable development in nine of the ten calendar years to 2025, yet its general liability triangle shows $1,593m of adverse development on accident years 2016 to 2024, netted in the headline against workers’ compensation releases. Discounting opens a further gap between regimes: about 9.5 points of Munich Re’s second-quarter 2026 reinsurance combined ratio of 69 percent was discount benefit. (Part V, Speaking the Language)
Price to book is the industry’s native multiple, and a low one has usually been a verdict either on the return or on the reserves. AIG, at 0.98 times book on September 4, 2026, reported a 7.5 percent return on equity for FY2025. James River Group Holdings (NASDAQ: JRVR) traded at 0.37 times on a 93 percent excess and surplus lines combined ratio, a verdict on its reserves. At the other end, Kinsale’s book value per share compounded at 34 percent a year from December 2022 to June 2026 while its price to book fell from 8.1 to 4.2 times, so its shares returned 11 percent a year. (Part VI, Analysis & Valuation, Chapters 21 and 22)
The variables that separated the listed winners were visible in advance, while over four- and five-year windows the change in the multiple was the largest term in the return. From 2021 to 2025 Travelers earned 10 points a year from a rising multiple against 6.0 points of book value growth. The highest multiples on September 4, 2026 belonged to companies with the lowest cost of acquiring a policy, Admiral (LSE: ADM) at 7.7 times book, Kinsale at 4.2 and Progressive at 3.7. Buybacks below book added value only where the return on that book exceeded the cost of equity, and AIG, which bought back heavily, finished last on the leaderboard. (Part VI, Analysis & Valuation, Chapter 23)
The countable effects of AI in this industry are operating facts, and none has yet moved an underwriting ratio. AIG reported that its AI tool raised quoted submissions 30 percent and cut time to quote 55 percent in Lexington‘s middle-market property business, and Travelers made more than half of its claims eligible for straight-through processing. The expense ratio, where the change was expected, rose instead: Progressive’s from 20 to 22 percent over the decade to 2025, and GEICO’s from 9.7 percent in 2024 to 12 percent in 2025. Claims savings land in loss adjustment expense, inside the loss ratio, and no carrier publishes the loss ratio of an AI-underwritten cohort, the test that would settle the argument. (Part VII, The AI Inflection)
Insurers fail on three timescales, and each failure has shown first in published disclosures. Under-reserved long-tail casualty takes five to twenty-one years, as at Mission Insurance, liquidated in 1987, and Reliance, liquidated in 2001. Catastrophe concentration takes about two years: seven Florida property carriers were ordered into liquidation between March 2022 and February 2023. The third mechanism, a holding company’s borrowing while its insurers stayed solvent, has happened once, at AIG. Everest Group (NYSE: EG) ran the casualty sequence in 2025 and survived it, with $1.7bn of reserve strengthening announced in January, a further $478m of adverse development in October, and a $1.2bn adverse development cover over $5.4bn of reserves. (Part VIII, Risks & Debates, Chapter 26)
The industry entered September 2026 on its best results in a generation, earned on falling premium and a quiet weather year. No hurricane made landfall in the US in 2025, and Europe’s four large reinsurers averaged a 20 percent return on equity. Fitch’s non-life reinsurer cohort improved its reported combined ratio in the first half of 2026, but its accident-year ratio excluding catastrophes worsened 2.3 points while premium fell 6 percent. Of the twelve debates the report sets out, the cycle divides S&P Global Ratings, which expects sector returns on equity of 12 to 15 percent in 2026, from Howden Re, which warns that another leg down would take large segments below the cost of capital by 2027. (Part VIII, Risks & Debates, Chapter 27)
The appendices give the analyst the working tools: the investable universe of ninety-four listed underwriters grouped by segment, with tickers, listing venues, market values at the September 4, 2026 close and one-line descriptions, and the six brokers beside them; a due-diligence checklist of 44 questions in ten sections, in the order of the analysis of Chapter 21; a reading list of books, shareholder letters and investor materials, interviews and podcasts, and data sources; and the sources for the report. (Appendices)
How to use this primer
The report does not need to be read in order. Suggested paths:
a generalist with limited time, Parts I and VI plus the checklist in Appendix B;
a reader interested in the history, Part II with Chapter 8;
an accountant, Part V;
an analyst working on a specific company, Chapter 14, then Parts III, V, and VI in order;
a risk officer, Part VIII with Chapter 26;
a technologist, Part VII;
a reader who came for the owner-operators, Chapters 15 and 16, with Chapter 8 for the episodes behind them and Chapter 23 for what their records are worth against the index.
Every chapter ends with a “What to remember” box, and the twenty-seven boxes read in sequence summarize the report. The checklist follows the order of the analytical procedure in Chapter 21, and the questions that can end the work come first.
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This content is published by MOI Global for educational purposes only. It is not investment advice, an offer, or a solicitation, and no security mentioned herein is recommended for purchase or sale. The publisher and contributors may hold positions in securities discussed. Figures are believed accurate as of the dates stated but are not warranted; readers should verify all data against primary sources before relying on it. Nothing herein constitutes legal, tax, or accounting advice.