Mr. Hartwig wrote that return on equity for companies is likely to increase above double digits for the first time since 1997 based on better underwriting, capital gains and higher investment yields from insurers' large bond portfolio investments.

The groundhogs predicted that the combined ratio of losses and expenses to premiums should improve to 100.3 compared with an estimated 101.4 for last year.

Mr. Hartwig noted that while the combined ratio continues to show improvement, "the bottom line is that the industry will still be paying out roughly $1.01 for every $1 it takes in."

Examining the spate of insurer rating downgrades over the past year, Mr. Hartwig said "the industry overall does not appear to have yet hit a ratings trough. Downgrades still far outnumber upgrades." However, "given the mature stage of the current cycle, upgrades should be the order of the day."

The Institute reported that results lately are far better than recent years, when the industry experienced its first-ever net loss of $6.5 billion and a combined ratio in 2001 of 115.7.

Companies queried for the forecast included A.G. Edwards, Prudential Securities, Fox-Pitt Kelton, Goldman Sachs, Merrill Lynch, Standard & Poor's, Tillinghast, Gill& Roeser, Raymond James and the Insurance Services Office.

The complete groundhog forecast, with commentary by Mr. Hartwig, is available online at www.iii.org.