US property and casualty (P&C) insurers returned to profit in the first quarter of this year despite a continuing decline in net written premium.

Figures from the US Insurance Services Office (ISO) and the Property Casualty Insurers Association of America show the sector achieved a net income after tax of $US8.9 billion ($10.3 billion), up from a loss of $US1.3 billion ($1.5 billion) for the corresponding period last year.

These results were accompanied by an improvement in the combined ratio to 101.1% from 102.2% last year.

But net written premium for the first quarter dropped to $US105.1 billion ($121.2 billion) from $US106.5 billion ($122.8 billion). Net earned premium also dropped to $US102.8 billion ($118.5 billion) from $US105.6 billion ($121.8 billion) in the prior period.

Improving profitability was largely driven by insurers’ investment gains during the period, with the sum of net investment income and realised capital gains on investments tripling from $US3.7 billion ($4.3 billion) last year to $US12.6 billion ($14.5 billion) this year.

Improving underwriting results also assisted the recovery, with net losses on underwriting falling to $US1.8 billion ($2.1 billion) this year from a loss of $US2.6 billion ($3 billion) last year.

The ISO’s Property Claim Services unit says US catastrophes in the first quarter of this year caused $US2.6 billion ($3 billion) in direct insured losses before reinsurance recoveries.

This was a decrease from the $US3.3 billion ($3.8 billion) direct insured losses recorded in the first quarter of last year, but an increase from the 10-year first-quarter average loss of $US1.8 billion ($2.1 billion).