Continued rate increases and lower losses led the U.S. propertyand casualty industry to its second consecutive first-quarterunderwriting profit in 2013, a new A.M. Best report says.

The Q1 2013 underwriting results show an improvement over Q12012, with the industry's combined ratio dropping to 94.7 from 97.4and underwriting income growing to $4.6 billion compared to $1.5billion.

The industry's net income climbed to $22 billion in the firstquarter compared to $14.2 billion in 2012's first quarter. Gainswere seen in both personal and commercial lines, in part due tolower catastrophe losses. Catastrophes accounted for 2.0 points ofthe combined ratio in 2013's first quarter compared to 3.2 pointsin 2012.

For personal lines, underwriting income was $2.2 billion in thequarter, up from $1.6 billion in 2012's first quarter. Net incomefor the segment was $5.3 billion for 2013's first quarter comparedto $4.9 billion the year before. A.M. Best says the segment'simprovement was attributed primarily to higher pretax operatingincome and higher realized capital gains, partially offset byhigher income taxes.

Pretax operating income was up nearly 8.1% for the first quarterof 2013 compared to the same period a year ago.

Net premiums earned (NPE) increased by $2.4 billion, or 4.1percent, to $60.7 billion for the quarter, while net loss andloss-adjustment expenses incurred increased by nearly $1.1 billion,or 2.6 percent, to $41.7 billion.

A.M. Best says the increase in NPE was attributed primarily torate increases,mmainly on the homeowners line of business, and to alesser extent on the private passenger auto liability line.“Rates

for homeowners multiperil coverages have been increasing to helpoffset a higher rate of incurred claims countrywide due to morefrequent and severe weather-related events over the past few years. A.M. Best notes.

For commercial lines, underwriting income was $1.1 billion for2013's first quarter compared to an underwriting loss of $0.2billion the year before. Net income was $12.8 billion, up from $7.4billion in 2012's first quarter.

A.M. Best says several commercial lines showed strong increasesin direct premiums written (DPW), notably workers' compensation(11.1 percent),general and products liability (8.3 percent),commercial multiperil (7.8 percent) and commercial auto liability(7.6 percent).

The ratings agency says that among the major lines of insurance,only two – medical professional liability and accident and health –showed declines in DPW for Q1 2013.

The commercial lines segment showed a 1.2 percent increase inNPW in the quarter, to approximately $47.2 billion. “The sustainedgrowth in premium reflects ongoing recovery in the exposure basegiven an improving economic environment, combined with ongoing ratefirming as market conditions improve,” says A.M. Best. As in recentquarters, growth in premium volume within the commercial linessegment has been driven primarily by the workers' compensationline, which has reported both rate increases and an expandingpayroll (exposure) base as economic conditions improve after therecession.”