According to a new analysis from ACORD, the “sustainable value creators” among the 100 largest property/casualty insurance carriers generated more than twice the amount of value through underwriting compared to investment activities over a 20-year study period.
However, the study also reveals a surprising finding: nearly half (48) of the top 100 insurers failed to create value. This marked a sharp increase compared to previous studies. In ACORD’s “2025 U.S. Property & Casualty Value Creation Study,” 36 companies were identified as value destroyers three years ago, and only 9 insurers were categorized as such in a 2021 study.
In line with past ACORD research, the 2025 study identified value creators and value destroyers based on whether their 20-year returns exceeded a benchmark. If companies surpassed the 8.2% cost of capital benchmark, they were considered value creators; otherwise, they were categorized as value destroyers.
The study further breaks down the value creators into two categories: sustainable value creators, who achieve the required return from both underwriting and investment activities, and hollow value creators, who generate value primarily through investment returns without substantial underwriting success.
Key Findings from the Study
While 52% of the top 100 companies were classified as value creators, only 35% were sustainable value creators. These companies achieved a 13.5% return on capital and collectively generated $324 billion in value. Of this, $229 billion came from underwriting, and $95 billion came from investments.
Defining Value Creation
ACORD’s approach to measuring value creation involves calculating free cash flow generated through both underwriting and investments, compared to a minimum required return. This minimum is set based on the 8.2% return of the S&P 500 over the 20-year study period. This year’s cost of capital is the highest recorded in recent years.
The study also noted that there were 17 hollow value creators whose underwriting operations consumed $85 billion of the $121 billion generated through investments. These companies had a net value creation of $36 billion. If it weren’t for their investment income, these companies would have been classified as value destroyers. The report highlights that their reliance on investment returns underscores the industry’s continued dependence on sources outside of core underwriting operations.
Insights on Size and Business Mix
The report further emphasized that larger carriers in the U.S. property/casualty market were more likely to generate sustainable value. More companies in the largest quartile (with net written premiums above $6 billion) achieved sustainable value creation, and fewer of them destroyed value compared to smaller companies. The breakdown of the study’s quartiles includes:
Companies writing over $6 billion
Companies writing $3-6 billion
Companies writing $2-3 billion
Companies writing under $2 billion
The data showed that 30 of the 52 value creators wrote premiums above $3 billion, while 28 of the 48 value destroyers wrote premiums under $3 billion. Interestingly, larger carriers—once often associated with value destruction—are now demonstrating that scale can bring advantages, particularly in data and information management.
Sustainable value creators tend to have a balanced portfolio with roughly half of their business in personal lines and half in commercial lines. In contrast, hollow value creators leaned more heavily toward commercial lines (56% commercial vs. 44% personal), and value destroyers had a stronger focus on personal lines (64% personal vs. 36% commercial).
In the personal lines space, sustainable value creators showed greater discipline in writing homeowners insurance. Their portfolios contained 22% homeowners, while hollow value creators had 39% and value destroyers 34% in homeowners.
Underwriting and Expense Ratios
The study also revealed significant differences in underwriting performance:
Sustainable value creators had a P/C loss and loss adjustment expense ratio of 70.2, which was 4-5 points better than hollow value creators (73.9) and value destroyers (75.3).
On the expense side, sustainable value creators had an underwriting expense ratio of 24.3, nearly 7 points better than hollow value creators (30.0) and more than 3 points better than value destroyers (27.4).
When breaking down underwriting expenses, ACORD found that sustainable value creators spent less on other acquisition expenses compared to other insurers in the study. Hollow value creators, on the other hand, had higher back-office expenses compared to both sustainable value creators and the overall industry average.
What Sets Sustainable Value Creators Apart?
ACORD’s report highlights several “value levers” that help sustainable value creators outperform their competitors:
Underwriting: These companies focus on profitable, intelligent growth, rather than simply expanding market share. They use data and advanced analytics, including AI, to target the right customers for acquisition, retention, and cross-selling.
Claims: They use technology as a multiplier for human judgment to improve productivity and decision-making. These insurers balance loss payments and adjustment expenses while maintaining high levels of customer satisfaction.
Customer Lifetime Value: Sustainable value creators optimize customer lifetime value, averaging two products per customer, with some even averaging five or more products. In contrast, the industry’s average is 1.5 products per household.
The Road to Sustainable Value
ACORD concludes with an important observation: the path to sustainable value creation is no longer straightforward. While insurers have traditionally focused on one of four strategic pillars—customer intimacy, product leadership, innovation, or operational excellence—carriers must now execute effectively across all four areas to stay competitive in the evolving market.
For the first time, this year’s study is available to both ACORD members and non-members throughout the industry. To download the report, visit www.acord.org/research.
Summary
The ACORD “2025 U.S. Property & Casualty Value Creation Study” underscores the evolving landscape of value creation in the insurance industry. While a majority of large insurers still create value, almost half of the top 100 carriers are failing to generate sustainable returns. Those who succeed do so through disciplined underwriting, smart claims management, and optimizing customer lifetime value.