The US property casualty industry increased net income nearly 52% to $US39.9 billion ($41.3 billion) in 2012 compared with the previous year, according to AM Best.

This reflects lower underwriting losses and modestly increased net investment income and realised capital gains, the ratings agency says in a report.

As a result, the industry policyholders’ surplus grew to $US598.4 billion ($619.6 billion), exceeding the previous record level of $US572.2 billion ($592.5 billion) from 2010.

The industry reported 2012 catastrophe losses of $US34.2 billion ($35.4 billion), down from $US41.3 billion ($42.8 billion) the previous year, despite Superstorm Sandy, AM Best estimates.

While total catastrophe losses remained above average, the decrease drove a lower underwriting loss of $US14 billion ($14.5 billion), compared with $US30.1 billion ($31.2 billion) in 2011.

Net written premium grew 4.4% because of a stronger pricing environment, modestly improved economic conditions and reduced levels of return premium, particularly in commercial lines.

The 2012 results reflect a challenging investment climate and investment yields declined overall, the report says.

But net investment income, composed mainly of bond interest and stock dividends, was steady at $US50 billion ($51.8 billion), compared with $US49.4 billion ($51.2 billion) the year before.