Although there were fewer catastrophic events in 2014 than in previous years, net income after taxes for private U.S. property and casualty (P&C) insurers for the first nine months of the year dropped by $5.1 billion to $37.7 billion, compared to $42.7 billion over the same time period in 2013, according to new figures released by ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America (PCI). Overall profitability, measured by the annualized rate of return on average P&C policyholders’ surplus, also dropped from 9.4% in the first nine months of 2013 to 7.6% over the same period in 2014.

According to ISO and PCI, the drop was driven by a decline in pretax operating income with the decline partially offset by an increase in realized capital gains on investments and lower federal and foreign income taxes. Insurers’ pretax operating income (the sum of net gains or losses on underwriting, net investment income and miscellaneous other income) fell by $8.9 billion to $36.6 billion in the first nine months of 2014 from $45.5 billion in the first nine months of 2013.

On a positive note, the P&C insurers’ realized capital gains on investments—not included in operating income—rose $2.8 billion to $8.8 billion in the first nine months of 2014, compared to $6.0 billion in the first nine months of 2013. Net investment income was $34.3 billion, the same for the first nine months of 2013 and 2014.