Private U.S. property/casualty insurers' net income after taxesrose from $13.9 billion in the first quarter of 2014 to $18.2billion in the first quarter of 2015. Measured by their rate ofreturn on average policy holders' surplus, insurers' overallprofitability grew from 8.4% to 10.8%, according to ISO, a VeriskAnalytics business, and the Property Casualty Insurers Associationof America (PCI).

In the first quarter of 2015, insurers' combined ratio improvedto 95.7%, compared to 97.1% in first quarter of 2014, and their netunderwriting gains increased from $2.4 billion to $4.1 billion. Netwritten premium growth remained at a steady 3.7% for the firstquarters of 2014 and 2015. In the first quarter of 2015, netinvestment income rose to $11.7 billion up from the previous $11.2billion a year.

Need to focus on underwriting

The first quarter of 2015 saw net investment gains of $16.4billion, after capital gains jumped from $2.9 billion to $4.7billion, increasing net investment income from $11.2 billion in thefirst quarter of 2014 to $11.7 billion in the first quarter of2015. Since the start of ISO's quarterly records in 1986, thismarks the highest first quarter capital gains and net investmentgains realized.

“The industry needs to focus on underwriting, as investmentgains may be unpredictable and investment yields will likely remainsuppressed for a while,” said Beth Fitzgerald, president of ISOInsurance Programs and Analytic Services. “It's those insurers thatstay current on emerging issues and make use of predictiveanalytics that will be the best prepared to weather potentialstorms that the markets, social or technological developments, ornature might send their way.”

Mild catastrophic losses

Net written premiums rose by 3.7% to $125.9 billion in the firstquarter 2015 from $121.4 billion in the first quarter of 2014. Theunchanged 3.7% net written premium growth rate from first-quarter2014 to first quarter of 2015 is below the 4.3% average for thelast 12 quarters and the 4.1% growth rate for full-year 2014. Inthe first quarter of 2015, the growth rate in net earned premiumsfell to 3.7% from 4.2% in first-quarter 2014 and 4.3% for full-year2014.

“Property/casualty insurers had a strong first quarter,underscoring strong capital levels, competitive markets,underwriting disciplines, and business competencies,” said RobertGordon, PCI's senior vice president for policy development andresearch. “These results, partially attributable to mildcatastrophic losses, have insurers well positioned to continue toprovide the necessary financial security for their policyholders aswe move farther into yet another uncertain hurricane season.”

View full report Property/Casualty Insurance Results: First-Quarter2015.