"U.S. insurers entered 2005 well capitalized and well prepared for major catastrophic losses, having implemented effective risk management strategies which helped insurers better manage losses and control costs," said Robert Hartwig, chief economist for the Insurance Information Institute.

Additionally, insurers' investments benefited from higher interest rates and a resurgent economy in 2005, he added.

"That being said, the $43.2 billion earned by property-casualty insurers in 2005 translates into a 10.1 percent return on surplus or net worth, well below the 14.9 percent return on equity earned by the Fortune 500 group of companies," Mr. Hartwig said.

Gregory Heidrich, senior vice president, policy development and research for PCI, cautioned that last year's catastrophe losses have had a significant effect on reinsurers and reinsurance markets that is likely to be felt by primary insurers. Catastrophe coverage in regions prone to natural disasters such as hurricanes and earthquakes will be most impacted.

"One major broker reported last month that at least five Bermuda reinsurers had either stopped underwriting or re-oriented their business since Hurricane Katrina," Mr. Heidrich said.

So despite the sizable increase in profits, challenges remain, the groups said.

"While the U.S. property-casualty industry's overall results for 2005 contain a number of positives, those countrywide numbers mask significant problems in specific markets and locations," said Michael R. Murray, ISO assistant vice president for financial analysis.

As an example, Mr. Murray cited the $24.7 billion in insured losses on residential and commercial property in Louisiana incurred in 2005.

Although that figure was before reinsurance recoveries and excluded losses covered by the residual market, it was still $3 billion more than all the premiums insurers charged for property insurance in the state from 1982 to 2004, he noted.