US property and casualty (P&C) insurers’ underwriting earnings declined last year and could be strained further as disturbing signals emerged in the December quarter.

The industry’s net income increased to $US56.6 billion ($78.6 billion) from $US55.9 billion ($77.6 billion) in 2014, but net underwriting gains fell to $US8.7 billion ($12.1 billion) from $US12.2 billion ($16.9 billion).

New figures from the Property Casualty Insurers Association of America (PCIAA) and analyst ISO Solutions show that the insurers’ combined operating ratio weakened to 97.8% from 97% in 2014, although net investment income increased to $US47.2 billion ($65.5 billion) from $US46.4 billion ($64.4 billion).

Policyholders’ surplus – or funds available to cover new claims – fell to $US673.7 billion ($935.2 billion) from a record $US675.2 billion ($937.3 billion).

Net written premium grew at a slower pace of 3.4% to almost $US514 billion ($713.6 billion), compared with the 4.2% rise recorded in 2014.

Net catastrophe losses dropped slightly to $US16.7 billion ($23.2 billion) from $US16.8 billion ($23.2 billion).

“It’s too early to tell whether the deterioration of underwriting results this past year starts a trend, but we are seeing heightened loss ratios for auto liability, both personal and commercial,” ISO Solutions President Beth Fitzgerald said.

“Likely factors behind the loss ratio increases for auto insurance include economic growth and low gas prices, which are putting more drivers on the roads, and increases in automobile repair costs.

“The slowdown of net written premium growth for the entire industry could indicate an even more challenging environment for insurers in the near future.”

The industry is worried by its poor fourth-quarter showing, in which the combined operating ratio exceeded 100% and net underwriting gains fell sharply to $US1.6 billion ($2.2 billion) from $US8 billion ($11.1 billion).

“The… insurance industry’s surplus remained near record levels in 2015, with overall insurer results consistent with those of recent years,” PCIAA Senior VP for Policy Development and Research Robert Gordon said.

“However, fourth-quarter results showed troubling signs of deterioration, with a significant slowdown in premium growth and the combined ratio climbing back over 100%.”