A double-digit decline net investment income in 2015 added a dour note to what was the third consecutive year of underwriting profitability for the U.S. property/casualty industry.

Underwriting income came in at $6.2 billion in 2015, A.M. Best determined in its latest special report. But pre-tax operating and net income were down from their 2014 levels, thanks to lower underwriting income and a 11.2 percent drop in net investment income, according to the latest A.M. Best special report.

The ratings entity said that policyholders’ surplus came in at $688.6 billion at the end of 2015, a 0.2 percent dip, a $1.5 billion reduction due to lower net income and a negative change in the industry’s accumulated unreleased gain position. As well, after-tax return on equity dropped to 8.1 percent in 2015, versus 9.2 percent in 2014.

Still, net premiums written are booked at $519 billion in 2015, a 3.4 percent increase over the previous year. That’s growth, but it reflects the second year in the decline of premium growth since it peaked with a 4.7 percent increase in 2015.

Net premiums written are still growing, particularly in commercial lines, due to modest economic growth, plus rate and exposure increases, A.M. Best said, even with the continued buildup of market pressure.

Other report highlights:

• Catastrophe losses adding just 3.5 points to the industry combined ratio in 2015 down from 4.0 points in 2014.

• The P/C industry’s accident year combined ratio grew 0.5 points, and the benefit from favorable development of prior accident year loss reserves declined. The combination the two left the reported 2015 combined ratio deteriorating to 98.3 from 97.4 in 2015.

• For the personal lines segment, underwriting income in 2015 declined to a $0.3 billion loss, from a $2.2 billion underwriting profit in 2014.

• Reinsurance transactions in 2014 caused a very high level of favorable development of loss reserves for the year. A return to a more normal, lower level of favorable reserve actions in 2015 reduced the benefit and contributed to the loss.

Source: A.M. Best