The net income of private US property/casualty underwriters increased to $16.4bn in the first-half of 2012, as against $4.8bn during the same period in 2011.

According to a report by US property-casualty insurance analyst firm ISO, the overall profitability of insurers, measured in terms of their annualized rate of return on average policyholders’ surplus, rose to 5.9% from 1.7% during the comparable period. The report has cited drop in catastrophe losses as the main reason for the rise.

ISO estimated that insurers’ net losses and loss adjustment expenses (LLAE) from catastrophes in the first six months of 2012 totaled $12.6bn, down from $25.7bn in during the same period a year ago.

Property Casualty Insurance Association of America (PCI) policy development and research senior vice president Robert Gordon said the policyholders’ surplus increased by $17.5bn to a near-record-high of $567.8bn at 30 June 2012.

"Despite challenging economic conditions, insurers are strong, well capitalized, and well prepared to pay future claims. Policyholders and regulators can rely on the insurance industry to fulfill its obligations when catastrophes strike."

According to ISO, a Verisk Analytics company, and PCI, the combined ratio, which is a key measure of losses and other underwriting expenses per dollar of premium, improved to 102.2% during the first-half of 2012 from 110.5% last year.

Net investment gains declined by $3bn to $25.4bn during the first-half of 2012, compared to $28.4bn during the same period a year ago, as insurers’ federal and foreign income taxes rose $3.5bn to $3.6bn from $0.1bn. (37)

The firm said that the figures mentioned were consolidated estimates for all private property/casualty insurers.