Medical liability insurers' investment income rose in 2025 as P&C income fell

Net investment income rose in 2025 for a composite of 110 U.S. medical professional liability insurers while falling across the rest of the property and casualty industry, according to a New England Asset Management analysis published in the Insurance AUM Journal.

The MPL composite's fixed income portfolios earned a lower book yield than the broader P&C industry even though average credit quality and duration were comparable, the report found. The income gain did not come from a richer bond book. NEAM's 2025 review, as Private Wealth Daily previously reported, used its own data to show the income line can fall while book yields climb.

For a general-account manager at an MPL writer, the gap to larger peers may be as much about risk budget as about market conditions. More than 90% of the composite holds less than $1 billion in invested assets, and larger MPL insurers that took greater investment risk tended to earn higher book yields.

Within fixed income, the MPL composite was overweight agency residential mortgage-backed securities and underweight tax-exempt municipal bonds and government and agency bonds relative to the P&C industry.

The MPL composite's investment leverage, measured as invested assets to surplus, was broadly in line with the P&C industry. Premium leverage was materially lower and reserves-to-premium ratio higher, consistent with the longer-tailed nature of MPL business, the report said.

The analysis draws on statutory filing data as of Dec. 31, 2025 from S&P Capital IQ Pro, supplemented with NEAM and ICE BofA data. It generally excludes Berkshire Hathaway from the P&C composite to avoid distortion from its outsized equity and alternative allocations. Phil Lee and Eric Huang, enterprise capital strategists at NEAM, wrote the report.