The latest US property and casualty (P&C) earnings season produced another broadly better-than-expected quarter, but market sentiment moved in the opposite direction, according to a research note from TD Cowen.
Across the sector, the median fourth-quarter 2025 EPS beat versus consensus was about 5%, with stocks initially rising a median 2% on the day of the results. Over the course of earnings season, however, shares drifted roughly 2% lower as concerns about artificial intelligence (AI)-driven broker disintermediation became a key focus for investors.
Those concerns intensified in early February, when AI-powered insurance tools began to be deployed more widely. Insurify’s launch of an insurance-focused ChatGPT app, approved by OpenAI and described as a digital “super-agent,” was followed by a sharp sell-off in listed brokers, with Willis Towers Watson, Aon and Arthur J. Gallagher each falling around 8% to 11% in a single session.
Some analysts and industry executives said the market reaction may not fully reflect the breadth of services provided by large commercial and specialty brokers, which typically include program design, risk advisory and claims support in addition to price discovery and placement.
The AI-driven volatility comes against a backdrop of solid industry fundamentals. According to the report, the US P&C sector surpassed $1 trillion in direct premiums written (DPW) in 2024 for the first time, with total DPW of about $1.05 trillion and personal lines accounting for just over half of that growth. Higher pricing helped bring the industry combined ratio down to around 92% in 2024, from 96% in 2023 and 98% in 2022.
At the same time, survey data point to consumer unease over the use of AI in insurance. Insurity’s 2025 AI in Insurance Report found only 20% of US consumers thought it was a good idea for P&C insurers to use AI, down from 29% a year earlier, highlighting ongoing concerns around transparency and oversight.
Distribution patterns have been more stable. Independent agencies and brokers remain the primary channel in the US market, placing more than 60% of P&C premiums - including about 87% of commercial lines - and maintaining share despite the expansion of direct-to-consumer offerings.
Commercial lines carriers generally reported results that exceeded expectations. Earnings benefited from lower-than-expected catastrophe losses and favorable prior-year reserve development. Research from Swiss Re points to US P&C DPW growth slowing from nearly 10% in 2024 to about 5% in 2025 and 4% in 2026 as rate momentum eases and competition increases.
Marsh’s Global Insurance Market Index showed global commercial insurance rates declining around 4% in the fourth quarter of 2025, the fifth consecutive quarter of composite rate reductions, led by property. In US property, Marsh data cited on earnings calls indicated average rate decreases of roughly 8%, with larger accounts experiencing greater downward pressure. Property-catastrophe reinsurance pricing is estimated to be down 10% to the low teens from the post-2023 peak but is still viewed by many market participants as broadly adequate.
Casualty trends have been more resilient. US casualty pricing rose about 9% in the quarter versus 8% in the third quarter of 2025, according to Marsh. RenaissanceRe reported largely flat ceding commissions in casualty reinsurance, with reinsurers benefiting from ongoing primary rate increases.
The excess and surplus (E&S) market, which has been a significant growth driver in recent years, showed clearer signs of slowing. Most E&S carriers in the TD Cowen coverage universe reported decelerating premium growth. Ryan Specialty’s fourth-quarter 2025 organic growth eased to 6.6% from 15% in the prior quarter, marking a notable step-down for a business that has been associated with double-digit expansion.
Personal lines results were generally robust. Auto and homeowners' carriers continued to benefit from earlier rate actions and relatively benign catastrophe activity, even as competition intensified with more carriers shifting from remediation to selective growth strategies, according to the report.
Meanwhile, conditions remain uneven across segments: non-standard auto writer Kemper, for example, reported a 106% company-wide combined ratio in the fourth quarter, up from 104.8% sequentially, indicating ongoing pressure in parts of the market.
Heading into the first quarter of 2026, the sector is contending with solid earnings and moderating but still-supportive pricing on one hand, and elevated narrative risk around AI on the other.
For intermediaries, a key issue will be how investors and clients assess the extent to which AI tools can automate distribution, and where human intermediation in complex and catastrophe-exposed lines continues to be seen as essential.
