Reinsurer and insurer profitability improved in the first quarter underpinned by rate gains and lower catastrophe losses compared to a year earlier, Gallagher Re says in a global report on financial results.

Companies tracked reported average premium growth of 11% driven by commercial lines and reinsurance rates, with significant variation by line of business and region.

The average combined ratio improved to 94% from 96% a year earlier when weather-related losses included the Texas freeze.

Economic inflation and more uncertainty around ultimate losses that will be incurred to settle claims as well as the impact of sustained low interest rates on investment income is driving higher pricing, the report says.

“Companies are achieving rate on rate increases in many cases for the fourth consecutive year,” the report says. “Some management teams noted that they are carefully monitoring trends in pricing and claims inflation and will adjust premium growth where required to support profitability.”

Some firms have established reserves for exposures relating to the war in Ukraine, although that was not a significant driver of overall results.

“One of the biggest challenges over the next three quarters is continued increases in social inflation due to its impact on loss costs and loss ratio trends, especially in the more liability exposed lines,” Gallagher Re says.

Declining equity markets contributed to a drop in the average return on equity to 9% from 14% a year earlier.

Gallagher Re’s report tracks the biggest reinsurers and insurers globally that have meaningful commercial lines or reinsurance operations. That includes AIG, Travelers, Chubb, Intact, Everest Re, Hartford, CNA, Munich Re, Hannover Re, Sompo, Liberty Mutual, MS&AD, Arch, Tokio Marine, Allianz, Fairfax, Mapfre, Markel, Swiss Re, Scor, Cincinnati, Axa, Aviva and Zurich.