Private U.S. property/casualty insurers collectively generated growth, higher net income and an improved combined ratio in the 2015 first quarter, ISO and the Property Casualty Insurers Association of America concluded in a new report.

Competitive markets and mild catastrophic losses are among the factors that led to the positive results, noted report co-author Robert Gordon, PCI’s senior vice president for policy development and research, in commentary accompanying the numbers showing a 31 percent jump in net income overall.

“Property/casualty insurers had a strong first quarter, underscoring strong capital levels, competitive markets, underwriting disciplines, and business competencies,” Gordon said in prepared remarks. “These results, partially attributable to mild catastrophic losses, have insurers well positioned to continue to provide the necessary financial security for their policyholders as we move farther into yet another uncertain hurricane season.”

The sector generated $18.2 billion in net income after taxes during Q1, according to the report, up from $13.9 billion in the 2014 first quarter. Additionally, returns on average policyholders surplus grew to 10.8 percent from 8.4 percent.

The combined ratio for private U.S. P/C insurers landed at 95.7 during the first quarter, versus 97.1 over the same period in 2014.

At the same time, insurers’ collective investment yield was relatively low compared to historical returns. Net investment income (dividends from stock and interest on bonds) landed at $11.7 billion in the 2015 first quarter, 4.6 percent higher than the $11.2 billion generated during Q1 in 2014, the report noted.

Beth Fitzgerald, report co-author and president of ISO Insurance Programs and Analytic Services (a Verisk Analytics business), cautioned in prepared remarks “the industry needs to focus on underwriting, as investment gains may be unpredictable and investment yields will likely remain suppressed for a while.”

Robert Hartwig, president of the Insurance Information Institute, said in a blog post analyzing the ISO/PCI report that policyholders’surplus also remained near a record high during Q1.

“Despite an unusually costly winter, weak economic growth and persistently low interest rates, the industry posted another profitable quarter aided by capital gains and reserve releases, Hartwig added. “Premium growth, while still modest, is now experiencing its longest sustained period of gains in a decade.”

Here are some additional findings in the ISO/PCI report:

• Earned premiums in the 2015 first quarter came in at $121.9 billion, up 3.7 percent from the same period in 2014.
• Net underwriting gains grew to $4.1 billion from $2.4 billion.
• Net written premiums came in during Q1 at $125.9 million, a $4.4 billion gain over the 2014 first quarter. The growth rate of 3.7 percent matches the year-ago period but is below the 4.3 percent average for the last 12 quarters and the 4.1 percent growth rate for 2014.
• Net written premium growth for insurers writing personal lines dropped 0.9 percent to 4.6 percent in the 2015 first quarter.
• Net written premium growth (excluding mortgage and financial guarantee insurers) for insurers handling mostly commercial lines stayed unchanged at 2.4 percent for the quarter.

Source: PCI, ISO/Verisk