The U.S. reinsurance industry reported an underwriting profit of $1.7 billion last year, making 2007 and 2006 the only times since 1980 that the industry has recorded a profit on operations, according to data released by the industry this week.

Scott Williamson, assistant vice president, financial analysis, for the Reinsurance Association of America, said the operating profits for the last two years "are partly a result of where we have been in the reinsurance cycle and the low catastrophe losses experienced in the last couple years, when compared to the 2004-2005 hurricane seasons."

He also noted that the U.S. "remains in an increasingly lower interest rate environment."

The data reported by the industry this week indicated that the 20 members of the RAA wrote $22.7 billion of net premium in 2007, a decline of $3.1 billion from the 2006 calendar year.

The combined ratio for the group was 94.7, a slight improvement over the 94.9 combined ratio reported for the same period in 2006, the report said.

The combined ratio is attributable to a 65.0 loss ratio and an expense ratio of 29.7 percent. For the same period in 2006, the loss ratio was 67.1 and the expense ratio was 27.8 percent.

Policyholders' surplus at Dec. 31, 2007 was $75.9 billion, compared to $74.5 billion for the same period in 2006.

Net profit for the U.S. reinsurance industry in 2007 was approximately $8 billion, or $9.7 billion pretax, Mr. Williamson said.

Most of it is attributable to investment income, he said, with the industry realizing an operating profit of almost $1.7 billion, or 94.7 percent--"roughly flat" when compared to the 94.9 percent operating or underwriting profit in 2006.

Mr. Williamson said it is the first time since approximately 1980 that reinsurers have experienced a combined ratio of less than 100, indicating an underwriting profit.

In context, Mr. Williamson said, given the industry's capital and surplus of roughly $76 billion, the industry's return on equity was in the 10-to-11 percent range.

"This is a significant improvement over what we have seen in the past several years," he said. "It is not stellar, but good for our industry, which has historically lagged the other financial services sectors."