While there's still a lot of room for improvement, things weren't all that bad for commercial property/casualty insurers during the first six months of this year compared with last year, industry analysts say.

The biggest difference is that catastrophe losses are down significantly compared with last year's disastrous first half. In addition, rates continue to increase, albeit modestly, and income is up.

But areas of concern remain, particularly regarding investment income, which shows no signs of significant improvement in the foreseeable future.

Results for the 10 largest U.S.-based or

-listed commercial property/casualty insurers that report quarterly results showed a marked improvement over those posted during the same period in 2011. Net income rose 56.7% to $10.64 billion, although about half of that was attributable to one company—American International Group Inc.

The results reflected improved underwriting performance and ongoing tax benefits.

In addition, the group as a whole experienced a modest 2.8% increase in net written premiums.

More significantly, the group's combined ratio improved to 98.1% from 104.4% during the same period last year.

The sector “performed pretty well,” said Paul Bauer, vp and senior credit officer at Moody's Investors Services Inc. in New York.

“The first half was better than last year's first half. The biggest change was that catastrophes were lighter. It was still above-normal in catastrophe activity with wildfires and tornadoes, but much less than it was in last year's first half,” Mr. Bauer said.

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“I think the results for the P/C insurers were very strong,” said Mark Dwelle, an insurance analyst at RBC Capital Markets, a unit of RBC Dominion Securities Inc., in Richmond, Va. The second quarter was marked by a “reasonably good follow-through on the pricing power we saw in the first-quarter results. And while catastrophe losses were a little bit of an offset, overall earnings were really very solid.”

“It was a reasonably good six-month period for the industry,” said John Ward, CEO of Cincinnatus Partners L.L.C. in Loveland, Ohio. Underwriting results improved modestly from 2011 due to lower catastrophe losses and “there are signs that rates are beginning to firm. I think the future looks very optimistic from a pricing cycle perspective,” he said.

“Pricing will likely continue to firm,” said Neil Stein, a director at Standard & Poor's Corp. in New York. “It will largely be in the cat-exposed lines. (Insurers) are looking to mitigate their results from the losses they had in previous years.”

Pricing “seems to be relatively healthy,” said Moody's Mr. Bauer. “Most lines of business seem to have low- to mid-single-digit increases. Some of the strongest increases have been workers compensation, but that's been one of the weakest lines in recent quarters.”

“We still need quite a bit of favorable price movement in commercial lines,” said James Auden, an analyst with Fitch

Ratings Inc. in Chicago. “It looks like at least through the end of the year we'll continue to see rate increases.”

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While the price movement appears to be in reaction to losses rather than underwriting capacity changes, “there are still a lot of folks chasing the business,” Mr. Auden said. “We have a lot of questions as to whether that momentum will continue.”

On the negative side, however, analysts say the current low interest rate environment is likely to continue for quite a while, depressing underwriters' investment income.

“The expectations for interest income continue to deteriorate,” said Meyer Shields, director at Stifel, Nicolaus & Co. in Baltimore.

Cincinnatus Partners' Mr. Ward called investment results the “one nagging negative.”

“I expect investment results will continue to be low until we see any change in the interest rate outlook,” Mr. Ward said. “It may be at the floor, but my best prediction is that it will remain steady at the floor level for the foreseeable future.”

Fitch's Mr. Auden agreed that there is no favorable movement in Investment income. “In 2013 you can have bonds maturing at 5.5% and what are companies replacing it with—2.5%?” he said.

Mr. Shields also said reserve releases for most companies “were a little lighter than they were last year, and we expect that will be the overall trend.”

Moody's Mr. Bauer agreed that reserve releases are slowing.

“Most companies are still reporting some positive reserve development, but it seems to be getting pretty close to a break-even level at this point,” he said.