U.S. insurers saw their collective net income jump by 50 percent in 2012 compared to 2011, and this year the industry looks as if it will benefit from some favorable trends in both the insurance market and the economy at large, even as it deals with some familiar challenges, according to Moody's Investors Service.

In a Special Comment, titled “US P&C Insurers Earnings Improve in 2012 Despite High CATs; Pricing Momentum Continues,” Moody's says the 2012 net-income improvement was driven primarily by lower catastrophe losses and higher earned premiums stemming from rate increases and growing exposures. Moody's says companies are reporting rate increases across all business lines.

“Overall, the weighted average combined ratio for the cohort [of Moody's-rated insurers] improved to 100 from 102; after excluding catastrophe losses, earnings improved by over 10 percent [compared to 2011], reflecting rate increases and generally benign loss cost trends overall,” the report notes.