US insurers can look forward to a bump in earnings over the coming months following a strong second quarter, according to ratings agencies.

Moody’s says property and casualty insurers’ net income in the second quarter was “significantly” higher than the corresponding period last year, driven by a favourable claims environment and rate rises across most business lines.

Despite catastrophe losses remaining above the 10-year average, claims were down on the corresponding quarter last year.

“Investment income remains stable and reserve releases, while higher this quarter, are expected to continue their moderating trend through the second half of the year, prompting companies to turn up the dial on rate increases to meet their return targets,” Moody’s Assistant VP Brandan Holmes said.

Despite a rise in net income, operating income – which excluded the impact of lower catastrophe costs and reserves – fell 11% in the second quarter.

In a note to investors, Standard & Poor’s says while insurers with exposure to crop insurance will experience some of the worst underwriting results in two decades, the losses are not likely to affect the capital of most insurers.

The second-quarter reporting season in the US has been marked by several strong performances, notably The Travelers Companies, which lodged an operating income of $US495 million ($474 million) after taking a $US364 million ($349 million) loss in the second quarter last year.

AIG’s insurance operations have also rebounded, earning $US1.91 billion ($1.83 billion) compared with $US1.52 billion ($1.45 billion) in the corresponding quarter.

Revenues from Berkshire Hathaway’s insurance division were up 4% in the second quarter to $US30.76 billion ($29.5 billion).

Fitch says that while a sustained hard market is unlikely, property and casualty rates should continue to rise through to next year, heralding a “long-awaited shift to positive pricing momentum”.

In a report issued last week, Fitch predicted net income for the industry will increase 47% by the end of the year to $US38 billion ($36.45 billion), before levelling out to $US40 billion ($38.37 billion) next year.