The Credibility Report
The weekly intelligence briefing for actuaries who move markets
The P&C industry is turning in its strongest underwriting performance in over a decade—Triple-I and Milliman project the lowest net combined ratio since 2013, even as LA wildfire losses mount. Winter Storm Fern is racking up billion-dollar losses across the eastern seaboard.
Meanwhile, reinsurance market January renewals confirmed sharper-than-expected softening, and Canada enters the cat bond spotlight as TD Insurance sponsors its second risk transfer.
📰 Headlines
🏆 US P&C Industry Set for Lowest Combined Ratio in Over a Decade
Triple-I and Milliman project US property-casualty insurers will achieve their best combined ratio performance since 2013, despite elevated cat activity including the LA wildfires. Underwriting discipline and rate adequacy are finally translating to bottom-line results.
Read more → Triple-I❄️ Winter Storm Fern Drives Billion-Dollar Insured Losses
UBS and AccuWeather project massive losses from Winter Storm Fern, with economic impacts potentially reaching $75-115 billion. Swiss Re's analysis highlights how storm duration and geographic scale are driving record loss potential.
Read more → Swiss Re Institute📈 Marsh Delivers Strong 2025 with 10% Revenue Growth
Marsh McLennan closed 2025 with revenue up 10%, demonstrating the brokerage giant's continued expansion. The results underscore the value of risk advisory services in a hardening market.
Read more → Marsh McLennan🇨🇦 TD Insurance Sponsors Second Canadian Cat Bond
TD Insurance returns to the ILS market with its second catastrophe bond focused on Canadian perils. The deal marks growing sophistication in Canadian risk transfer as domestic insurers seek alternative capital.
Read more → TD Insurance📉 Reinsurance Prices Soften Sharply at January Renewals
Moody's Ratings reports reinsurance prices came in lower than expected at the 1/1 renewals, with S&P Global signaling softening will continue throughout 2026. The buyer-friendly trend reflects abundant capacity.
Read more → S&P Global💊 UnitedHealth Earnings Plunge 41%, Issues Soft Guidance
UnitedHealth Group reported a 41% earnings decline and issued cautious 2026 guidance, highlighting pressure across health insurance operations and pharmacy benefit economics.
Read more → InsuranceNewsNet💰 Selective Insurance Q4: Earnings Pressure Continues
Selective Insurance reported Q4 results showing continued earnings pressure as regional carriers navigate elevated loss activity. A bellwether for middle-market commercial trends.
Read more → Selective Insurance🔬 Research Spotlight
A Quantitative Model for Climate Change Adaptation Resilience Bonds
This paper develops a quantitative framework for climate resilience bonds—financial instruments that fund adaptation projects while providing insurance-like payouts when climate events occur. The model addresses a critical gap: how to price instruments that serve both investment and risk transfer functions.
For actuaries, this bridges catastrophe modeling with public finance, offering new product design possibilities for municipal and sovereign climate risk.
Key insight: The dual-trigger structure (project completion + event occurrence) requires novel reserving approaches that blend construction risk with nat-cat exposure.
Axiomatic Characterization of Quantile Risk-Sharing
Rigorous mathematical foundations for quantile-based risk allocation—directly applicable to reinsurance treaty design and capital attribution.
Risk TheoryAsymptotic Bounds for Empirical Tail VaR Bias
New bounds on TVaR estimation bias with immediate implications for Solvency II internal models and regulatory capital calculations.
arXiv • ReservingFinite-Sample Valid Prediction of Insurance Claims
Proposes prediction intervals that maintain coverage guarantees with finite data—addressing a key limitation of traditional credibility methods.
arXiv • CredibilityHealth Insurance Efficiency: COVID-19 Impacts
Empirical analysis of how the pandemic reshaped health insurance operating efficiency across different market segments.
Journal • Health🎯 Deep Dive: The Decade-Low Combined Ratio
The Triple-I/Milliman projection of the lowest US P&C combined ratio since 2013 marks a turning point for an industry that spent years chasing rate adequacy. Three factors drive the improvement:
- Cumulative rate increases: Years of double-digit commercial lines increases are finally earning through
- Underwriting discipline: Carriers walked away from unprofitable risks rather than chase premium
- Frequency benefits: Lower auto claim frequency persists post-pandemic in some segments
The wildcard remains cat volatility. The LA wildfires and Winter Storm Fern will test whether reserves are truly adequate. But the underlying attritional loss ratios tell a story of an industry that learned from the soft market pain of the 2010s.
🛠️ Practical Takeaways
📊 Pricing
Combined ratio improvements suggest rate adequacy achieved—monitor for competitive pressure as results attract capital.
📋 Reserving
Winter storm loss development warrants close IBNR monitoring; early estimates range widely ($75-115B economic).
🌀 Cat Modeling
Canadian cat bond expansion signals growing awareness of northern peril exposures; update accumulation models.
🏛️ ERM
Reinsurance softening creates buying opportunity—lock in multi-year terms while capacity is abundant.
📚 From the Journals & arXiv
| Paper | Source | Score | Focus |
|---|---|---|---|
| Quantitative Model for Climate Resilience Bonds | Journal | ⭐⭐⭐ | Cat/Climate |
| Axiomatic Quantile Risk-Sharing Rule | Journal | ⭐⭐⭐ | Risk Theory |
| Asymptotic Bounds for Empirical Tail VaR | arXiv | ⭐⭐⭐ | Reserving |
| Finite-Sample Valid Prediction of Claims | arXiv | ⭐⭐⭐ | Credibility |
| Health Insurance Efficiency: COVID-19 Impacts | Journal | ⭐⭐ | Health |
| Bayesian Multiple Testing for Suicide Risk | arXiv | ⭐⭐ | Life/Mortality |
| Optimal Underreporting and Competitive Equilibrium | arXiv | ⭐⭐ | Fraud |
| GRU Model for 180-Day Mortality Risk | arXiv | ⭐⭐ | ML/Mortality |
| Thorin Processes and Their Subordination | Journal | ⭐⭐ | Stochastic |
👀 What We're Watching
🌡️ Winter Storm Loss Development
Early estimates vary by $40B; watch for reserve charges in Q1 earnings
📉 Reinsurance Pricing Trajectory
If softening accelerates, expect M&A activity among capacity-constrained carriers
🇨🇦 Canadian Cat Bond Market
TD's second issuance signals institutional commitment; more sponsors likely to follow
💊 Health Insurer Earnings
UnitedHealth's soft guidance may foreshadow sector-wide margin compression