The U.S. property/casualty (P&C) industry's underwriting and operating performance improved substantially in the first half of 2012, according to a special report from A.M. Best.

Catastrophe losses, while remaining elevated compared with recent years' experience, declined significantly from 2011’s record levels. In addition, rate increases and exposure growth drove increases in net premiums written and net premiums earned.

The industry's net income nearly tripled, to $20.4 billion from $7.0 billion at June 30, 2011, driven by improving underwriting results. While the industry continues to post an overall underwriting loss, the reported combined ratio of 101.0 for the first six months of 2012 improved more than eight points, from 109.5 during the same period last year. Net investment gains of $28.1 billion were down slightly from $28.7 billion in the prior year.

The underwriting ratio reflects lower catastrophe losses, which accounted for 6.0 points of the industry's 2012 six-month combined ratio, less than half the 12.7 points of catastrophe losses during the first half of 2011. Improvement in core (i.e., non-catastrophe) losses also contributed to the improved combined ratio, while the underwriting expense ratio increased slightly to 28.8 from 28.6.

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