U.S. property/casualty insurers fourth quarter 2014 net income dropped 13.8% from that of the same period a year earlier, according to an analysis released Tuesday by Verisk Analytics' ISO unit and the Property Casualty Insurers Association of America.

Net written premiums increased 4.8% in the fourth quarter of 2014 from fourth quarter 2013 to $119.60 billion, while the combined ratio for the U.S. improved to 94.9% in the fourth quarter from 97.2% during the same period in 2013. The industry's underwriting profit also improved, increasing 61.6% to $8.03 billion, according to the ISO/PCI report, which is comprised of consolidated estimates for all private property/casualty insurers based on reports accounting for at least 96% of all business written by private U.S. property/casualty insurers.

For 2014 as a whole, however, net income dropped 12.5% in 2014 to $55.50 billion from that of 2013. Net written premiums increased 4.1% to $496.58 billion. Underwriting income decreased 19.4% to $12.29 billion while the combined ratio deteriorated slightly to 97.0% in 2014 from 96.2% in 2013. Policyholder surplus stood at $674.71 billion at yearend 2014, a 3.4% increase over that of yearend 2013.

“Property/casualty insurers had another moderately good year in 2014, with fourth-quarter results particularly strong,” said Robert Gordon, PCI's senior vice president for policy development and research, in a statement accompanying the report. “The industry's profitability, premium growth, and underwriting ratios all performed better than long-term historical averages, and policyholders' surplus reached record levels. However, while insurers are benefiting from continued low catastrophe losses, overall 2014 results deteriorated slightly from 2013 with insurers' net income dropping 12.5%.”

“Right now, good underwriting results are a must for insurers,” said Beth Fitzgerald, president of ISO Insurance Programs and Analytic Services, in the statement. “But with much of the improvement in underwriting results for the last two years attributable to moderate catastrophe losses and dependent on continued reserve releases, one has to wonder just how sustainable the net gains on underwriting will be. Advanced risk models suggest that losses from catastrophic events will continue to increase, and, therefore, those insurers who take advantage of predictive analytics should be better positioned to handle whatever the future might hold.”