The US mutual insurance industry, which focuses on property and casualty insurance, reported a significant improvement in its financial performance in 2025. According to a report by AM Best, a leading credit rating agency and insurance information provider, the industry's net income doubled to $42.6 billion in 2025, compared to the previous year. This improvement was primarily driven by a turnaround in underwriting results, with the industry shifting from a $7.2 billion underwriting loss in 2024 to a $14.8 billion profit in 2025.
The improvement in underwriting results was attributed to several years of rate increases and underwriting discipline implemented by mutual insurers to address inflation and changing claim costs. Prior to 2025, insurers had implemented price increases, restructured deductibles, and raised policy limits, which contributed to revenue growth. According to Justin Aimon, a financial analyst at AM Best, these actions supported earnings, and the industry benefited from advances in data analytics, technology, and risk management models.
Despite the improved results, the industry faced ongoing challenges, including increased expenses and catastrophe losses. Underwriting expenses rose 5.8% in 2025, but this was partially offset by a moderate decline in loss and claim adjustment expenses. Weather-related events continued to impact mutual insurers' results, although the industry avoided significant hurricane-related losses. However, wildfires, local floods, and severe thunderstorms continued to drive claims and pressure financial results.
In contrast, policyholder dividends increased during 2025, as mutual insurers distributed more capital to policyholders amid improved underwriting results and investment returns. Policyholder dividends reached $5.5 billion in the first quarter of 2026, up from $500 million in the same period in 2025. The industry's net income also surged in the first quarter of 2026, more than tripling compared to the same period in 2025, although this was partly due to a significant loss in 2025 caused by California wildfires.
The size and geographic spread of mutual insurers continued to influence their performance, with larger insurers having a more significant impact on overall results. Smaller insurers, which often focus on specialized or local markets, tended to report lower loss ratios but were more vulnerable to weather-related fluctuations due to their limited geographic diversification. According to Anthony Molinaro, an assistant director at AM Best, smaller insurers often build strong relationships with independent agents and have high customer retention rates.
The mutual insurance industry's growth in net premiums written slowed to 5% in 2025, approaching pre-pandemic levels. Despite this, insurers' capital positions continued to strengthen, with policyholder surplus increasing for the third consecutive year to $468 billion. This represented a $64 billion increase in 2025, the largest annual rise in the period covered by the report. The improvement in capital positions reflected the industry's resilience in the face of ongoing market pressures.
However, AM Best identified social inflation as an ongoing challenge for mutual insurers, particularly those operating in liability and accident lines. Market conditions in these lines remained more challenging, exerting additional pressure on insurers to accurately assess prices, claim costs, and liability exposures. The agency's report highlighted the need for insurers to continue adapting to evolving market conditions and emerging risks.
Key points
- US mutual insurers reported a net income of $42.6 billion in 2025, driven by improved underwriting results.
- The industry's underwriting profit turned positive in 2025, reaching $14.8 billion, after a $7.2 billion loss in 2024.
- Policyholder surplus increased by $64 billion in 2025, reaching $468 billion.
