US property and casualty insurers achieved a 22% rise in aggregate net income to $US18.5 billion ($26.3 billion) last year, Moody’s Investors Service says.

The sector benefitted from a drop in catastrophe losses to $US14.3 billion ($20.3 billion) from $US19.4 billion ($27.6 billion) in 2017.

The combined operating ratio improved to 96.8% from 99.8%.

Hurricanes Michael and Florence and the California wildfires were the most costly loss events last year.

The 22 Moody’s-rated insurers continue to report favourable reserve development, with the figure rising to $US3 billion ($4.3 billion) from $US2.1 billion ($3 billion) in 2017.

“Generally benign loss cost trends in most lines have helped companies generate reserve releases… we believe US industry reserves are reasonable overall,” the ratings agency says.

Personal motor insurers recorded a 12.1% rise in net written premium to $US94.9 billion ($134.9 billion), lifted by higher rates.

Their combined operating ratio strengthened to 92.4% from 97.3%.

Home insurers’ net written premium grew 6.1% to $US14.9 billion ($21.2 billion), but the combined operating ratio blew out four percentage points to 101.3% due to losses from the hurricanes and California fires, plus rising construction costs.

Moody’s expects rates for home policies to rise in the low to mid single digits, but in loss-affected regions insurers will try to push towards high single digits.