Moody’s-rated US property and casualty insurers increased third-quarter net income by 11% over the corresponding period last year.

The growth was driven by lower catastrophe losses and better underwriting margins, the ratings agency says.

“Underlying combined ratios continued to improve, with compound earned-rate increases outpacing relatively benign loss-cost trends,” Moody’s analyst Ji Liu said.

“Investment income fell modestly by 3%, while reserve releases were down… continuing their moderating trend.”

Moody’s expects rate momentum in commercial lines to remain positive over the medium term due to continuing low interest rates and elevated catastrophe volatility.

However, the sector’s prospects for enhanced earnings are limited because “plentiful capacity will continue to dampen the upwards trajectory of rates”.