US insurers have recorded a 10% jump in net operating income for 2003, according to ratings agency Fitch. It says there was a 6.9% improvement in the combined ratio for 2003 to 98%, generating a 10% increase in net operating income for the year.

Although this marks the second consecutive year of improvement, Fitch says “questions linger” about the market’s ability to produce stable underwriting profits and adequate returns on capital.

Some companies’ results were tempered by an increase in adverse reserve development.  Fitch says an industry-wide deficiency in loss reserves remains, but the effects on earnings should be lower this year.

Fitch has maintained its “negative” rating outlook in the property/casualty commercial lines and reinsurance sectors, expecting fewer ratings actions but more downgrades than upgrades.

It’s a different story in the US health and life insurance industries, where profits jumped 437% to $18.1 billion in the first nine months of 2003 – the best three-quarter increase in a decade, according to Weiss Ratings.