P&C insurers are beginning to understand the need to drive rate increases and reverse the industry’s soft-market trends of recent years, says XL CEO Mike McGavick.

“This is the first quarter in which I feel that those of us who operate insurance businesses on the whole are finally ‘getting it,’” McGavick said during a fourth-quarter-earnings conference call with financial analysts last night. “You can see that rate is starting to grow year-on-year.

“We have been expecting this, because in these interest-rate environments, the rate levels that are being priced into these risks have not made sense,” he added. “So it is really good to be hearing the kinds of commentary I’ve heard across the market about rate and about underwriting discipline overall, particularly on the primary side.”

McGavick added that the company has been willing to walk away from what it considers unprofitable business, and also has no intention of letting up in its own push for rate. The direction in which pricing across the industry is  going in, he said, helps in that regard: “I do feel strongly there’s now a bit more tailwind to our efforts than there has been in the past.”

According to the most recent statistics released by The Council of Insurance Agents & Brokers, rates moved into positive territory near the middle of 2011 and sustained incremental growth through all of last year. This bucked the six-year soft-market trend that came after a hard-market peak in 2001 spurred by 9/11.

XL Group plc reported net income of $85 million for Q4, compared to a net loss of $514 million for Q4 2011. Revenues were up 11 percent, or $185 million, to $1.9 billion.

The carrier’s Q4 results suffered from losses attributed to Superstorm Sandy that produced P&C operations combined ratio of 105.9—still a 2.3 point improvement over the prior year.

For the full year, XL produced net income of $730 million, a significant improvement over the 2011 net loss of $404 million. Revenues also increased 8 percent, or $534 million, to $7.23 billion.

Underscoring McGavick’s push for bottom-line improvement at XL, he pointed to the carrier’s full-year combined ratio of 96.3—a significant 11.2 drop from 2011.

“We certainly are not done making this a better company,” he said. “It is not yet the XL we dream of, but I can confidently say we are prouder of the company every day.”