2024 Insurance Year in Review and 2025 Developments

Sector Financial Performance

The insurance industry's performance in the financial markets closely mirrored the broader market in 2024, with the S&P Insurance Select Industry Index (INDEXSP:SPSIINS) ⁸ tracking alongside the S&P 500 for much of the year. This comparable performance marked a significant improvement from 2023, when the insurance sector substantially underperformed in the broader market. The alignment reflects stronger insurer profitability, aided by successful repricing initiatives and the positive impact of high interest rates on investment portfolios.

Valuation metrics for insurance companies also showed positive momentum throughout 2024. US market capitalization grew by 27.6 percent for brokers, 25.3 percent for P&C insurers, and 12.7 percent for life insurers, as discussed further below. This growth trajectory underscores investor confidence in the sector's ability to navigate evolving challenges and capitalize on emerging opportunities in 2025. However, that confidence is being tested in early 2025, as equity markets have swung sharply in response to geopolitical headlines and ongoing uncertainty over global trade policy.

Life and Health Insurance

Persistently elevated interest rates remained a key driver of demand for savings-type products in 2024. Total US annuity sales rose 13 percent year-over-year to $106.7 billion in the first quarter of the year, with registered index-linked annuities and fixed-income annuities both setting new records. ⁹ Despite signals from the Federal Reserve regarding potential rate cuts, annuity buyers eager to lock in higher guarantees fueled sustained sales momentum. This strong annuity performance was built on a record-breaking 2023, when total US annuity sales increased 23 percent to $385 billion, driven largely by a 36 percent surge in fixed annuities. ¹⁰

Life insurance sales, after setting records for 3 consecutive years through 2023, showed signs of cooling in 2024. Following $15.7 billion in new annualized premiums in 2023 (a 1 percent increase over 2022), ¹¹ the first quarter of 2024 saw both total new premiums and the number of policies sold decline by 1 percent year-over-year. ¹² However, younger demographics, particularly consumers under 50, continued to drive life insurance application growth, with social media playing a pivotal role in educating and influencing purchasing decisions.

Looking ahead, life premiums are expected to rise by approximately 2 percent in advanced markets from 2025 to 2026. ¹³ Meanwhile, emerging markets such as China, India, and Latin America are projected to achieve premium growth of around 5.7 percent, following an estimated 7.2 percent expansion in 2024. ¹⁴ However, early 2025 economic headwinds and consumer belt-tightening could moderate these growth expectations. Elevated interest rates are also boosting investment yields for life insurers, which is expected to support profitability through the remainder of 2025.

Despite recent positive trends, life and annuity insurers recognize that neither pandemic-driven interest in mortality products nor the current high interest rate environment is likely to serve as sustainable growth drivers over the long term. To position for lasting success, many insurers are investing in core system modernization, automation, and process redesign initiatives to enhance operational capabilities and customer experience.

The life and health insurance sector performed slightly below the broader market in 2024, with US market capitalization rising by 12.7 percent. Growth was accompanied by significant volatility, with the sector's average Total Enterprise Value (TEV) to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio declining by 11.8 percent in the US between January and December.

P&C Insurance

In the US, the P&C insurance sector posted a $22.9 billion underwriting gain in 2024, with the industry's combined ratio improving by 500 basis points from 2023 to 96.6 percent, supported by rate increases in personal lines that outpaced claims costs. Pretax operating income surged by 123.5 percent to $109.3 billion, buoyed by underwriting gains and a 21.3 percent rise in earned net investment income. ^{15, 16}

The property market stabilized somewhat in the first half of 2024, with abundant capacity and favorable underwriting results across both insurance and reinsurance. Insured natural catastrophe losses reached approximately $154 billion globally, with a particularly severe North Atlantic hurricane season, up from $123 billion in 2023, reinforcing disciplined underwriting and careful risk selection. ¹⁷ Notably, the rising share of "secondary perils," such as convective storms and wildfires, placed continued pressure on primary insurers. While properties with favorable profiles saw some rate relief, particularly in noncatastrophe areas, challenging risks continued to face higher pricing, albeit at a moderate pace compared to 2023.

In casualty lines, rates generally increased modestly across general liability, auto liability, and workers compensation, with overall conditions remaining stable for better-performing risks. Difficult-to-place risks—including senior housing, subsidized housing, vacant properties, and wildfire-exposed assets—continued to rely heavily on the excess and surplus markets, which remained vital to absorbing capacity gaps. ¹⁸

In personal lines, pricing pressure persisted. Auto insurance rates rose 20.6 percent year-over-year in early 2024, the sharpest annual increase since the 1970s, while homeowners insurance premiums continued to rise in response to loss severity trends and higher reinsurance costs. ¹⁹ These dynamics were further exacerbated in early 2025, as insurers in wildfire-prone states like California reevaluated their pricing models following new regulatory shifts that took effect in January.

Looking ahead, nonlife insurers' ROE is expected to improve to approximately 10.7 percent in 2025, up from around 10 percent in 2024. ²⁰ While premium growth was estimated at 3.3 percent for 2024, with advanced markets driving most of the expansion, early signs of economic deceleration in 2025—including weakening consumer demand and lower new vehicle sales—could temper further growth. ²¹ Still, emerging risks and evolving customer demands offer meaningful opportunities for AI-related insurance, where annual global premiums are projected to reach $4.7 billion by 2032. ²²

The P&C sector performed slightly better than the broader market in 2024, with US market capitalization growing by 25.3 percent. TEV-to-EBITDA also increased by 17.4 percent in the US, reflecting stronger investor confidence.

Multiline Insurance

Multiline insurers benefited from their diversified business models in 2024, enabling them to navigate challenges that impacted specific lines of business. With operations spanning P&C and life insurance, these companies were able to offset underperformance in certain segments with stronger results elsewhere. This diversification has historically provided multiline insurers with more stable earnings compared to single-line insurers, making them attractive to risk-averse investors during periods of uncertainty.

Strong capital positions also continued to fuel merger and acquisition (M&A) interest across the sector. As firms sought to streamline operations and focus on core businesses, M&A activity remained notable. For instance, AIG continued its divestiture strategy by selling its personal travel insurance intermediary, Travel Guard, to Zurich Insurance Group for $600 million (plus a potential earn-out) in a deal that closed in December 2024. ²³

Looking ahead, multiline insurers are expected to continue benefiting from their diversified platforms while confronting challenges related to technological disruption, climate risk, and evolving customer demands. Their ability to cross-sell products across different customer segments and leverage shared operational infrastructure positions them well for sustainable growth through 2025, even as early-year economic signals—including tariff uncertainty and market volatility—prompt more cautious capital deployment across the sector.

The multiline insurance sector's average US market capitalization declined marginally by only 0.1 percent from January to December. However, EBITDA grew at about 14.2 percent, suggesting that stagnant valuations were driven more by investor sentiment than by changes in operational performance.

TEV-to-EBITDA ratios fluctuated sharply in the US, beginning at 9.9x in January, peaking at 10.9x in March, and settling at 9.0x by year-end. This volatility reflected broader uncertainty around interest rate trajectories and investor sentiment, which became increasingly reactive to geopolitical developments and the tariff news flow in early 2025.

Brokers

Significant consolidation activity shaped the broker landscape in 2024, fueled by private equity sellers looking to exit investments in smaller intermediaries they had nurtured over the past decade. Notable transactions included Marsh McLennan's $7.8 billion acquisition of McGriff Insurance Services from TIH (formerly Truist Insurance Holdings) in September, representing a strategic push into the midmarket segment. Similarly, Arthur J. Gallagher & Co. announced its agreement to acquire AssuredPartners for $13.5 billion in November, the largest-ever US broker sale to a strategic acquirer. ²⁴

While the overall volume of announced broker deals in 2024 moderated, deal flow from Q1 to Q3 was down 15 percent compared to the rolling 5-year average, and high-profile transactions underscored the continued importance of inorganic growth strategies. ²⁵ Pet insurance managing general agent businesses also remained an active focus, with Chubb acquiring Healthy Paws for approximately $300 million and Independence Pet Holdings expanding its portfolio through acquisitions of Pets Best and Spot Pet Insurance. ²⁶

The initial public offering (IPO) market for brokers showed renewed signs of life in 2024. TWFG, Inc., completed a $187 million IPO in July at $17 per share, achieving an enterprise valuation of approximately $925 million. Looking into 2025, brokerage IPO ambitions remain strong, with intermediaries such as Acrisure and HUB International continuing to explore public listings, although equity market volatility in Q1—fueled in part by geopolitical headlines and global tariff uncertainty—may influence the timing and valuation outcomes of these offerings. ²⁷

As the sector moves further into 2025, brokers are expected to continue focusing on technological innovation, service expansion, and strategic acquisitions to maintain their competitive advantage and justify premium valuations. The brokerage segment remains well-positioned for sustained growth given its pivotal role in distribution, advisory, and risk management services in an increasingly complex insurance landscape.

The US insurance brokerage sector posted strong gains in 2024, with market capitalization increasing by 27.6 percent. TEV rose by 16.5 percent in the US, reflecting robust investor confidence in the sector's business model and growth prospects. However, this valuation growth occurred alongside more modest EBITDA gains, up 11.6 percent in the US, indicating that market enthusiasm outpaced underlying earnings expansion. By year-end, US brokers were trading at 21.0x EBITDA (up from 17.1x in March). These premium multiples underscore investors' willingness to pay for the sector's reliable cash flows, low capital intensity, and strategic importance within the insurance distribution chain.

Reinsurance

Global reinsurance dedicated capital reached a record $769 billion at the end of 2024, a 5.4 percent increase over the restated 2023 year-end figure of $730 billion. ²⁸ Growth was primarily driven by retained earnings, with index companies (which account for 82 percent of total reinsurance capital) increasing their capital base by 5.3 percent to $629 billion. ²⁹ Nonlife alternative capital also expanded by 6.6 percent to $114 billion, supported in part by an increased issuance of catastrophe bonds. ³⁰

The industry's financial health remained strong in 2024. The average solvency ratio for the top 4 European reinsurers stood at 265 percent, well above target ranges, and both reported an underlying ROE that stayed well above the cost of capital. The underlying combined ratio improved to 93 percent in 2024, down from 96 percent in 2023, marking the strongest result since the launch of the Reinsurance Market Report in 2014. ³¹

A notable development in 2024 was the shifting profile of natural catastrophe losses. Reinsurers carried a lower proportion of these losses compared to prior years, with their share declining from 9.2 percent in 2022 to 7.3 percent in 2023, and further to 6.9 percent in 2024. ³² This trend reflects higher attachment points and the nature of recent losses, with secondary perils—such as severe convective storms and wildfires—being increasingly retained by primary insurers.

Early 2025 events, particularly the Southern California wildfires, further underscored this shift. While the estimated $35–$40 billion in insured losses strained primary insurers, most major reinsurers reported absorbing only 25–35 percent of their annual catastrophe budgets, highlighting improved risk layering and capital resilience. ³³

Looking ahead, the reinsurance sector remains well-positioned for a strong performance in 2025. Assuming a "normal" level of catastrophe losses, the industry is projected to deliver an underlying ROE of around 15 percent and a headline ROE between 18 and 19 percent. ³⁴ Traditional reinsurance capital is expected to grow by more than 6 percent, driven by continued profitability despite higher levels of capital return. ³⁵ However, tariff-related global trade friction and market volatility in early 2025 may impact the sector's investment income trajectory and influence capital deployment strategies. ³⁶

The reinsurance sector experienced solid growth in 2024, with US market capitalization growing by 19.8 percent, outpacing TEV growth of 12.5 percent. This divergence implies a stronger investor appetite for equity returns, possibly driven by improved profitability and moderating leverage. Supporting this view, EBITDA for US reinsurers increased by 20.9 percent in 2024, reflecting strong underwriting performance and favorable rate conditions. Similar trends were seen across the broader insurance sector, with market cap growth exceeding TEV growth for both P&C insurers and brokers.

Transactions

The insurance M&A landscape in 2024 was characterized by strategic consolidation, with a focus on transformative deals over transaction volume. Activity started slowly in the first quarter but gained momentum throughout the year, culminating in several high-profile transactions during the second half.

In the life and annuity sector, major strategic moves dominated. In May, AIG divested a 20 percent ownership stake in Corebridge Financial to Japan's Nippon Life Insurance Company for $3.8 billion, continuing its post-spin-off strategy to reduce ownership. Later in the year, Allstate announced a $2 billion agreement to sell its employer voluntary benefits business to StanCorp Financial Group, marking the first step in repositioning its health and benefits businesses for broader growth.

The year culminated with the largest life and annuity transaction of 2024: Nippon Life's $10.6 billion acquisition of Resolution Life, marking the largest-ever acquisition by a Japanese insurer. This move reflected the broader trend of Japanese insurers expanding internationally in response to aging and shrinking domestic markets.

Reinsurance transactions also featured prominently. Prudential Financial agreed to reinsure approximately $11 billion of reserves backing its guaranteed universal life policies to Wilton Re, generating expected proceeds of about $350 million. Meanwhile, RGA announced a transaction with Manulife involving $5.4 billion in reserves across two legacy business blocks, including US long-term care and structured settlements.

In P&C lines, strategic divestitures remained a major theme. AIG continued its focus on streamlining by selling its personal travel insurance intermediary, Travel Guard, to Zurich for $600 million plus a potential earn-out. Separately, Ambac sold its legacy financial guarantee business to Oaktree Capital Management for approximately $420 million in cash.

The broker sector saw the most significant consolidation activity. Highlights included Marsh McLennan's $7.8 billion acquisition of McGriff Insurance Services and Arthur J. Gallagher's $13.5 billion agreement to acquire AssuredPartners, strategic moves aimed at expanding middle-market share and reclaiming ground from private equity-backed consolidators.

Private equity interest in insurance assets remained strong, although investors adopted a more selective approach. Notable deals included Sixth Street's $5.1 billion acquisition of legacy specialist Enstar Group Limited, alongside Liberty Strategic Capital, J.C. Flowers, and other institutional investors. Distribution platforms, specialty underwriters, claims services businesses, and insurance technology firms remained key targets.

Looking ahead, the M&A outlook for 2025 is complex. Stabilizing inflation and the potential for declining interest rates could support increased deal activity, as by mid-2024, insurance sector M&A activity had already risen 23 percent year-over-year. ³⁷ Discussions from late December 2024 and early 2025 suggest continued momentum. However, heightened market volatility—driven by geopolitical tensions, economic instability, and tariff-related trade friction—could dampen some of the late 2024 tailwinds. Adding another layer of complexity, the deregulatory stance of the new Trump administration may encourage a more active M&A environment, although the balance between decreased regulatory scrutiny and potential restrictions on foreign investment will be an important dynamic to watch. ³⁸

Conclusion

As the insurance industry turns the page on a dynamic 2024, it enters 2025 with an improved financial footing and heightened strategic urgency. ^{39, 40} Underwriting performance rebounded sharply across several lines, particularly in P&C lines, while capital markets rewarded efficient operators, driving double-digit valuation gains among brokers, life insurers, and reinsurers. Yet, beneath these financial gains lies a rapidly transforming risk landscape.

The structural evolution of catastrophe losses is perhaps the industry's most immediate pressure point. While insured natural catastrophe losses surpassed $150 billion in 2024, reinsurers continued to shift toward higher attachment points, leaving more risk with primary insurers. The growing prevalence of secondary perils—including wildfires, severe convective storms, and localized flooding—underscores the urgent need for improved modeling, risk selection, and diversification strategies. This urgency has only intensified in early 2025 following the devastating Southern California wildfires, which pushed catastrophe models and reinsurance layers to their limits.

At the same time, the industry's digital and data transformation is entering a new phase. Generative AI adoption accelerated meaningfully in 2024, with over three-quarters of US insurers reporting implementation across underwriting, claims triage, and customer engagement. In 2025, the focus is shifting from experimentation to scalable execution, pressuring insurers to overcome challenges around data governance, integration, and trust. Regulators are taking note, and increased scrutiny around explainability, data usage, and AI model risk is shaping how insurers approach operational deployment. Those that can embed AI securely and ethically across the value chain will unlock significant efficiency gains and a competitive differentiation.

M&A activity will continue to serve as a critical tool for strategic repositioning. While overall deal volumes declined modestly in 2024, transaction values remained elevated, particularly in the brokerage and life reinsurance segments. Private equity interest remains strong, especially in businesses that combine capital efficiency, rich data assets, or scalable distribution platforms. At the same time, regulatory scrutiny is likely to intensify. Globally, supervisors are sharpening their focus on climate risk disclosures, capital adequacy, and the systemic implications of embedded financial technologies. In the US, regulatory attention to insurer ownership structures, credit risk transfers, and consumer fairness is expected to grow, especially as economic and political volatility introduces greater uncertainty into federal policymaking during the first half of 2025.

As insurers prepare for an uneven macroeconomic environment shaped by potential interest rate shifts, geopolitical instability, and evolving demographic needs, they face a critical imperative: to recalibrate risk models, modernize operational infrastructure, and deliver meaningful value in a changing world. Sustained performance in 2025 will demand not just capital strength but strategic clarity: balancing innovation with risk discipline, and technological progress with regulatory and societal expectations.

In this context, the path forward is not merely about navigating disruption, but about fundamentally reengineering the business of insurance for resilience, adaptability, and long-term relevance.