(Bloomberg) -- U.S. property-casualty insurers’ quarterlyinvestment income dropped to the lowest since 2004 as falling bondyields pressured the industry.

The figure fell to $10.9 billion in the three months ended March31 from $11.7 billion a year earlier, according to a report Thursday from the Property Casualty InsurersAssociation of America and ISO, a unit ofVerisk Analytics Inc.

The annualized yield on the industry’s portfolio fell to 2.9%from 3.1%. That compares with an average of 3.8% over the pastdecade and peaks of more than 8% in 1984 and 1985.

Pressures for companies

Sinking interest rates add to pressures for companies such asTravelers Cos. and Allstate Corp., which are also confrontinghigher-than-average natural disaster costs and the increasedfrequency of car accidents as low fuel prices encourage motoriststo drive more.

First-quarter net income for the industry fell to $13.3 billionfrom $18.1 billion a year earlier, a decline of 27%.

“Insurers will be very challenged to reach long-term historicalreturns in the current hyper-competitive market,” Robert Gordon, a senior vice president at theinsurers’ association, said in a statement.

Still, P&C insurers have it easier than life insurers, whichcan hold premiums for decades before paying claims, making themeven more vulnerable to low interest rates. The S&P 500 Life& Health Insurance Index has declined 2.9% this year as of12:13 p.m. in New York.