Insurers and reinsurers produced a combined $3.9 billion net profit in the year to September, up 28% on the previous 12 months as underwriting results and investment income improved, the Australian Prudential Regulation Authority (APRA) says in latest quarterly statistics.

September-year profits are at their highest level since 2014, historical trends for the past five years show, and come amid a broader hardening trend reported in the insurance market after a long period of depressed pricing.

Gross written premium increased to $47.2 billion from $45.1 billion, while gross earned premium rose 3% to $46.4 billion and gross incurred claims fell 7% to $30.9 billion.

The APRA statistics for the latest period are based on data from 85 primary insurers and 10 reinsurers licensed to operate in Australia.

Underwriting earnings rose 9% on the previous year to $4.2 billion, driven by premium increases and lower claims costs from natural catastrophe impacts in household and domestic motor classes.

This was slightly offset by a fall in long-tail class profits due to smaller reserve releases in compulsory third party and employers’ liability classes.

Investment income rose 25.1% to $2.5 billion, buoyed by higher unrealised gains from interest-bearing investments. “However, it remains at a historically low level,” APRA says.

Net profit for primary insurers rose to $3.7 billion from $3.1 billion a year earlier, while reinsurers achieved a profit of $197 million compared to a prior loss of $43 million.

Overall return on net assets for both sectors was 14.2%. up from 11% a year earlier.